Fixing Rain Damage in Israeli Properties

Rain in Israel is considered a blessing for the country, providing essential drinking water and helping local farmers, but rain is not a blessing when it enters your property. Creative Estates Israel CEO Shaun Isaacson explains why rain damage occurs in Israeli properties during the winter and how to fix it.

In many houses and apartments in Israel you will see damp patches on ceilings and external walls during the winter, with bubbling plaster and paint a common featureg. If you or your tenants notice that there is water coming through during the rainy season, you may want to send someone to check on the roof, window frames and walls.

Why Do Israeli Homes Leak in the Winter?

Leaks are a fact of life in many Israeli homes, old and new because Israeli buildings are made of poured concrete, stone and tiles, and rain water tends to find and infiltrate even the tiniest cracks. Because the dry, hot summer is significantly longer than the short, wet winter, homes are designed to stay cool and are poorly insulated. White walls, tiled floors, flat roofs and large windows are all excellent for summer living, but they present many challenges during the winter months.

In other countries where houses are constructed out of wood, the issue of water damage is much more serious because wooden beams can rot and collapse. However, in stone and concrete homes the water generally drains through the cracks and dries out, causing no long-term damage but only superficial patches.

Recurring leaks are hard to prevent because water may enter through a crack at one point in the external wall and emerge somewhere else inside, making it very difficult to identify and fix the source of the leak. Fixing one crack does not guarantee that further cracks will not open up, particularly where surfaces are exposed to baking hot sun for extended periods.

Fixing Leaks in Israeli Homes

Israelis love technology, so naturally they have created a solution for the problem of recurring leaks. It is a portable x-ray machine that sees through walls and identifies where the water is coming from. However, it is not a cheap machine and hiring the expert who can use it and read the results of the scan can be very costly. It is usually recommended to use this technology in situations where the source of the leak is hard to identify, in order to minimize the damage involved in opening up walls, floors or ceilings to fix the problem.

The problem of rain collecting on a flat roof is a familiar one, and it can be very difficult to fix the roof in such a way that rain water runs away from the cracks instead of collecting in the same places and making the cracks worse. Roofs – whether flat or tiled – generally only leak in the winter, so that is the busy season for roofing engineers. Calling a roof expert in the summer may be cheaper, but unless you have the roof fixed before the rains stop, it is impossible to know whether the fix that you are paying for is going to work or not. The best advice we can give is to call a recommended roofer as soon as you see any sign of water penetration, so that it can be fixed before the damage gets worse and you can see that the water is no longer coming in.

Leaks around your property can be aggravated by blocked external drains, including in the frames of patio doors, which can fill with water and leak into the house. It is worth noting that holes made in the external walls – for example, where planters or hammocks have been hung from hooks – can invite water inside. In properties facing the sea, the problem of water damage is compounded by the corrosion caused by salt in the water.

Managing Mold in Israeli Apartments

Whilst water damage to paintwork is unsightly, the real problems arise when mold starts to grows on the wet plaster. Mold is troublesome because it can be toxic and can cause health problems. People who live in damp and moldy environments can suffer from throat irritation, coughing or wheezing, eye irritation, or skin irritation, and some people have mold allergies which cause more severe reactions. Black mold must be cleaned off damp walls so that its harmful spores do not spread. It usually cleans off easily with a diluted bleach solution or a mold removal spray, sold in Israeli supermarkets.

The property owner is responsible for fixing leaks, but tenants have a responsibility to mitigate their effects by informing the landlord or property manager and by keeping the property ventilated. Ventilation is crucial to prevent the development of mold and to help wet plaster to dry out between rain storms. However, tenants are often reluctant to leave their windows open in the cold, wet weather. A good property manager will keep an eye on this issue and recommend adding air vents if they see that a room is becoming moldy in the winter.

You will probably want to replaster the walls and ceilings to fix the damage from a leakg, but it is always best to wait for rain damage to dry out completely before plastering and repainting. Remember that the last rains in Israel may only happen in April, so don’t rush to the paint store too soon!

Repainting in the Spring

Recurring rain damage from leaks has given rise to the tradition in Israel of repainting the interior of your home every spring with white paint. It also explains why white is the most popular color for internal walls – not only does it help keep homes cool in the summer, but white paint is much easier to match than other colors!

It may also be a good idea for property owners to paint the outside of the building with waterproofing chemicals, particularly if the building is covered with Jerusalem stone. Although the indigenous yellow limestone is beautiful, giving Jerusalem its legendary golden glow, it is actually porous and not particularly helpful in protecting your property against the rain!

Creative Estates Israel has a team of maintenance experts who spend most of the winter months attending to leaks and water damage, and then repainting the properties that they manage. Contact us about managing your Israel property today.

Israel’s New Commuter Network

The new network of light rail lines across the Tel Aviv Metropolitan Area will not only relieve traffic congestion throughout central Israel, but it will also change the real estate market in the towns that it connects.

The long-awaited Tel Aviv Metropolitan Area Mass-Transit system is now under construction, starting with nine underground rail stations being built in central Tel Aviv along what is known as the Red Line. These stations will be connected by a light rail network across the city, with multiple train lines reaching out to connect the surrounding suburbs and towns, in addition to and intersecting with the existing bus route network.

real estate opportunities

NTA – Metropolitan Mass Transit System Plan for 2024

Tel Aviv–Jaffa is already Israeli’s largest metropolis, having absorbed many of the surrounding towns into its suburbs. The planned train system will enable commuters to live and work in different towns and to travel to work on public transport instead of sitting in traffic jams.

The Red Line will connect Petach Tikva, Bnei Brak, Ramat Gan, Tel Aviv–Jaffa and Bat Yam. The next line slated for construction is the Green Line, connecting Herzliya, Tel Aviv, Holon and Rishon LeZion. Simultaneously, work will start on the Purple Line, connecting Yehud, Or Yehuda, Ramat Gan, Tel Aviv, Kiryat Ono, Givat Shmuel and Petach Tikva. The Green and Purple lines are planned to open in 2024. Four additional lines are planned, eventually connecting more towns to the commercial heart of the country.

Tel Aviv’s New Red Line

The Red Line will be the first to open, hopefully in 2021. It will start in Petah Tikvah and continue along Jabotinsky Street in Bnei Brak, and through Ramat Gan. The tracks will continue to the Arlozorov train station, run along Begin Street and near the Azrieli Center, from where they will head south of the Kirya to Manshiyya and Jerusalem Boulevard in Jaffa, ending in the southern suburb of Bat Yam. In the future the line may be extended to meet the Moshe Dayan road interchange in Rishon LeZion.

The Red Line will cover a route of 24 kilometers, including 11 kilometers of underground lines running beneath the streets of  Tel Aviv. Twenty-four of the stations will be above ground, and 10 are being built underground. The plan is for trains to run 90 seconds apart during rush hours, and three to four minutes apart during off-peak times.

Planning Ahead

Anyone considering investing in real estate in Israel should check out the plans for the various rail lines and look for properties within walking distance of the planned stations. There is no doubt that proximity to the Tel Aviv Metropolitan rail network will increase the purchase and rental value of properties as commuters discover the benefits of light rail travel in Israel.

Talk to Shaun Isaacson today about opportunities for great real estate investments in Israel, and how we can help you to purchase and manage your properties in Israel for profit.

Cleaning House in Israel – 7 Essential Products

Creative Estates Israel manages many rental properties in Israel and sends in teams of professional cleaners between rentals and before owner visits. We asked our cleaning crew for the 7 best cleaning products for cleaning house in Israel, so here are their recommendations for keeping your home in Israel clean and shining!

  • Economica – household bleach is the universal cleaning product in Israel. It is used generously to clean floors and surfaces, often with pleasant scents added to the bleach to mask its unpleasant smell. It is easy to forget how caustic it is – always wear gloves and beware splashes on clothing.
  • Magic Sponge is the secret product that we use to keep our white walls white! Almost any mark comes off with a damp magic sponge, and it is not impregnated with chemicals so it is easy and safe to use.
  • Calgon often provides the remedy for those annoying limescale deposits that appear wherever water sits. Because water in Israel is ‘hard’, it leaves behind white calcium deposits. Accumulated deposits can block pipes and inhibit the functioning of kettles, hot water heaters, shower heads and washing machines, so look for appropriate Calgon descaling products for your appliances too.
  • Sponga Stick – it’s not a product, but it is the “weapon” of choice for most Israeli cleaners in the war on dirty floors. Simple but effective – simply wrap a damp cloth (shmatter in Hebrew!) around the rubber floor stick and wipe your floors quickly and easily. Sponga is the Israeli way to clean!
  • Window Cleaning Spray – this is a no-brainer for keeping windows clean so that you can see the sunshine and enjoy those bright blue skies. However, pick your season – there is no point cleaning your windows in the winter or the spring until the last rains are over, because rain in Israel often carries dust or sand, and you’ll just have to clean them all over again!
  • St. Moritz Oven Cleaner – if you need to clean your oven after a spill or to prepare for Pesach, this is the strongest cleaning product we know! It attacks baked-on greasy spills, but it is also highly toxic – open the windows to ventilate the kitchen, wear gloves and old clothes to use this product, and always keep it far away from children.
  • Vinegar – some people swear by natural cleaning products like vinegar and baking soda because they don’t like using dangerous chemicals. Vinegar can often help to remove light limescale marks and to clean windows, so you can save your chemical weapons for the heavier cleaning tasks.

If cleaning house in Israel sounds like hard work that you don’t have time for, the Creative Estates Israel cleaning and maintenance team would be happy to take care of your Israel rental property. Talk to Shaun Isaacson about our property management services today.

Aliyah and Israeli Property Prices

One of the factors in the steady upward trend in property prices over the past 10 years is the steady increase in immigration to Israel. Shaun Isaacson discusses how Aliyah affects the Israeli real estate market and what he advises investors who are planning to make Aliyah in the future.

Demand for property in Israel is driven both by increasing immigration from countries where Jews feel uncomfortable (like France, the Ukraine, Turkey and Venezuela), and also by planned Aliyah by people of all ages from English-speaking countries, for whom Aliyah is generally an ideological or lifestyle choice. Immigrants of different nationalities choose to settle in different cities around Israel – some are motivated more by price and some by the communities where they will feel most at home. This means that real estate prices in cities such as Herzliya, Ra’anana and Jerusalem are much less elastic than other places, because of the consistently high demand from Anglo Olim.

According to statistics from the Ministry of Immigrant Absorption, between 2001-2016   34,000 Olim settled in Jerusalem and 27,000 immigrants moved to Tel Aviv. During the past 15 years, almost 10,000 Olim from France and 10,000 Russian Olim chose to live in Netanya, while 21,000 immigrants moved to Haifa.

Aliyah and Israel Property PricesWhile Anglos tend to choose the communities where they have friends, many other immigrant populations tend to move en masse to more adventurous and cheaper places. Thousands of French Olim have moved all the way to Eilat and over 1,000 recent arrivals from Argentina moved to Beersheva. Ashdod, Ashkelon, Bat Yam, Beit Shemesh, Kfar Saba, Modi’in, Petach Tikva and Rishon LeZion are also popular destinations with many nationalities – there is an entire neighbourhood of Petach Tikva known as Little Belgium! There is no doubt that the steady flow of immigrants has helped to keep the rental markets strong in these cities, and also has an impact on property sale prices.

Although the Go South! and Go North! campaigns run by Nefesh BNefesh are incentivizing immigrants to move beyond Israel’s overcrowded urban communities, it requires an additional degree of courage for someone making the big move to Israel to choose a rural destination. Generally Olim prefer to start out in familiar territory where they have an existing support network to help them adapt to the challenges of Aliyah, and that often means renting their first home in a community where they know people from back home.

Shaun Isaacson, CEO of Creative Estates Israel, often helps Olim to find rental properties in Israel and also manages properties for ‘potential Olim’. “We have tenants in some of our properties who have just immigrated to Israel. I generally recommend to people that they rent for a year or more rather than buying a property when they first make Aliyah, because it helps to check out the area before putting down roots.

“At the same time, many of my property owning clients have bought Israeli real estate as a buy-to-let investment with a view to making Aliyah and living there later. In the current climate, I usually encourage investors to buy the property that will give them the best rate of return, even if it is not in an area where they can envisage living. The rental income will continue to flow when they themselves move to Israel and decide where they want to set up home.

“Getting a foot on the Israeli property ladder before making Aliyah is usually a good financial decision. But investment decisions should not be confused with deciding where in Israel you would like to live, particularly if your Aliyah is a few years ahead. Who knows how the real estate map of Israel will have changed by the time you arrive!”

For more information about investing in property in Israel, as an investment and/or with a view to Aliyah, please contact in complete confidence for a no-obligation consultation.




Renovating a Kitchen in Israel

If you are renting out a house or apartment in Israel, one of the most important features to potential tenants will be the kitchen. Shaun Isaacson of Creative Estates Israel explains how to add value to your Israeli property by renovating the kitchen.

As in many other cultures, the kitchen is often the center of a Jewish home. Family life and social life in Israel tends to focus around eating, so your tenants may expect a fully-equipped modern kitchen in their rental apartment. So here are some helpful points to consider before you start to renovate:

Kosher Kitchens

Not everybody in Israel is religious, but a 2016 poll revealed that even one-third of secular Israelis said they keep a kosher home. This usually involves keeping dairy and meat dishes in separate cupboards, washing them in separate sinks, and sometimes – at the more religious end of the spectrum – even having two separate ovens. You may have to consider the size of the kitchen and practicality of installing multiple sinks and appliances, but there is no doubt that advertising a kosher kitchen will add to the rental value of your property in most areas of Israel.

Israeli Plumbing

Depending on the age of the building in which your kitchen is located, you may encounter practical challenges when trying to upgrade the plumbing. Installing a second sink, for example, may involve adding additional water and waste pipes. It is not recommended to throw food waste down the sinks in Israel because the pipes are often narrow and can become blocked easily. Unblocking pipes will usually be the landlord’s responsibility, so you may want to install filters in the kitchen sinks that can be easily cleared. For the same reason, sinks with food disposal systems are not common in Israeli kitchens. You will save yourself money in the long term if you help your tenants to avoid kitchen sink disasters and pipe blockages.

Chilling in Israel

Refrigerators and freezers are an essential feature of any Israeli kitchen. Because of the hot weather during most of the year, some Israeli cooks will keep almost all their ingredients in the refrigerator. It is considered good practice to keep flour, rice, sugar, and many dried herbs and spices refrigerated to avoid possible infestation and to conserve their flavor. When planning your kitchen renovation in Israel, we recommend leaving large gaps for your tenants’ to install their refrigerator and freezer.  Some tenants may also want to install a cold water dispensing machine, which requires a thin pipe from the main cold water feed.

What is Shayesh?

When potential tenants walk into your new kitchen, they may ask about the ‘shayesh’. This is a catch-all Hebrew term that describes the kitchen surfaces that are usually made from stone. When renovating your Israeli kitchen you may want to choose natural granite or marble, but we recommend installing counter-tops made from caesarstone or other engineered stone materials. The advantage of these part-synthetic stone surfaces is that they are heat-treated and less likely to crack or show scratches. They are cheaper to install and maintain and will keep your kitchen looking good!

Creative Kitchens in Israel

Creative Estates Israel has renovated numerous kitchens in our clients’ rental properties. We have a team of contractors who have extensive experience in the various tasks involved in removing the old kitchen and installing a new one. We recommend that our clients talk to us before bringing in an expensive kitchen company, because we can always beat their prices and install a great-looking kitchen for less. Talk to us today about your rental property and any renovations that you require.

A typical Israeli kitchen renovation – taking it back to  the basics!

kitchen renovation Israel

No Limit on Rents in Israel

The new Fair Rents Law does not restrict Israeli landlords from raising rents, as had been proposed.

After months of debate and years of controversy, the Fair Rents Law passed into law on July 17 2017. The new law regulates the relationship between landlords and tenants by fixing certain terms for residential leases and creating minimum standards to ensure that rental apartments are fit for habitation.

Although the original version of the law proposed in 2013 included a restriction on raising rents, the final version of the Fair Rents Law does not actually limit landlords’ rights to request an increase in residential rental rates. It also only applies to homes that are rented out for periods of between three months and 10 years, and not to vacation properties.

The main changes introduced by the Fair Rents Law can be summarized as follows:


    Landlords must pay for property insurance, but renters are officially responsible for paying bills for utilities, municipal taxes (arnona) and day-to-day maintenance.


    Renters must pay for any damage that they cause to the property through “unreasonable use”. Owners are responsible for repair of damage caused by “reasonable use,” and must do so within 30 days. Urgent repairs must be carried out within three days, and if they are not then renters can deduct the cost of the repairs from their rent. The landlord must pay for anything that increases the value of the property.


    Landlords may not demand a guarantee or deposit of more than three months’ rent, and this money can only be used if the renter does not pay rent or other payments on time, or if they cause damage to the property, or vacate the property late.


    If the parties agree that the renter can continue living in the property after the contract date, either party can then end this extension arrangement with reasonable notice.


    Whoever hires a realtor to rent out or find a property must pay the real estate agent’s fee.

Shaun Isaacson, CEO of Creative Estates Israel, who is a qualified lawyer and licensed realtor involved in long-term rentals throughout Central Israel, welcomes the new legislation. “Landlords who already provide a good standard of accommodation, and whose properties are well-managed and maintained, are happy that this legislation has finally passed into law. The threat of rent restrictions was worrying for some Israeli property owners, but we are happy to see that the all-important relationship between landlord and tenant will be regulated without imposing unnecessary restrictions.”

It is estimated that 2 million people live in rented accommodation in Israel, and by regulating this market the government hopes to encourage long-term rentals as a comfortable and safe alternative to buying housing.

The “Tent Protests” in 2011 were in part protesting the lack of regulation at the bottom of the rental market, and the proposed regulations designed to create fair economic conditions for renters and reduce pressure in the housing market. The new legislation combines proposals from six private members bills submitted by Knesset members from various parties, and it is seen as a good compromise between the different interest groups represented.

For more information about Creative Estates rental property management service in Israel, contact Shaun Isaacson at or on +972 526521096. We will give you a price quote in complete confidence and without obligation.


Buying to Rent in Israel

How does Israel’s buy to rent market compare with other real estate markets around the world? What profit can investors expect to make from buying and renting out apartments? 

As with many things in Israel, the real estate market is complex and hard to predict. Israeli property prices rose by 5.9% during 2016, while rental prices rose by just 1.4% over the same period – the lowest annual increase since 2008. The shortage of housing stock and the rise in mortgage interest rates is boosting demand for rental housing but not driving up rental prices, so yield rates for investors are not increasing in parallel with housing prices.

Potential property investors look for a number of different factors when assessing their likely return on investment – purchase price, anticipated increase in property value, rental returns and renting costs. They also look for economic stability and predictable regulations, both of which are difficult to find in this region of the world. For example, fluctuations in the value of the shekel, which has risen 12% against the dollar over the past 5 years, make it difficult for overseas investors to calculate their ROI.

Legislative uncertainty has made Israeli real estate investments more unpredictable in recent years. The purchase tax on housing for investment was increased in 2015, and there is legislation on the books to tax the owners of three or more properties (currently held up by Israel’s Supreme Court). There have been multiple attempts to regulate the rental market in Israel but none have resulted in legislation.

Various bills have been introduced in order to try to stabilize rental prices, by either prohibiting landlords from raising prices or incentivizing them not to do so. They have tried to specify what conditions a rental property must meet, what repairs landlords are liable to make, and the maximum value of the collateral that they can demand from tenants. However, these bills have not passed into law because the government does not see it as an urgent priority, leaving the market largely unregulated.

One of the consequences of this regulatory vacuum is that Israel offers the lowest landlord costs in the world. According to the Global Property Guide (, Israel has one of the lowest “round trip costs” for property investors of any country, ranking 102 out of the 123 countries that they have surveyed. They look at the total cost of buying and then re-selling a residential property of comparable value, including all the rental costs (except the sale price itself), and this figure is expressed as percentage of the property value. In Israel, this total transaction cost is 6.74% of the property value, compared with 8.03% in the UK, 10.65% in Hungary and 18.45% in France. This means that the price of buying and selling investment properties, in terms of registration costs, real estate agent and lawyers’ fees and sales and transfer taxes, is relatively low in Israel compared with most other countries.

The same Global Property Guide shows Israel as levying 7.75% tax on rental income, which ranks us 89th out of 130 countries measured. In Switzerland the tax is 48% but in the Bahamas and many other countries there is no such tax, so Israel sits somewhere in the middle of the table. (Their calculations assume that the property owner is a non-resident foreigner with no other local income.)

Indices like this are not totally reliable, because situations change and certain assumptions have been made in the collation of comparable figures. For example, the agents’ and lawyers’ costs paid by buyers and sellers vary widely, with buyers of more expensive properties often paying proportionately lower agents fees.

However, it is clear from the Global Property Guide and other international indices that Israeli properties do not give the best return on investment compared with other countries around the world. The Guide website shows the return on investment in Israel as 2.57%, less than the average yield for the United States at 2.75%, and close to the bottom of their international table as the 76th of the 80 countries for which gross rental yields are measured. Investors could probably make much higher profits by investing in Eastern Europe or Asia, and yet the property investment market in Israel remains strong.

At Creative Estates, we understand that return on investment is not the only driving force in the Israeli buy-to-let market. In our experience, people who buy properties to rent in Israel are usually looking not only for a good long-term return on their investment, but also to own properties that they and their family may live in one day. They recognise that Israel’s strong economy, rising birth rate and steady flow of immigrants are keeping property prices high. Politicians and economists may talk optimistically about increasing the supply of properties and taking the heat out of the market, but most investors recognize that real estate is holding its value.

At Creative Estates, we don’t believe that the Israeli property bubble is going to burst – it may deflate slightly as the supply of new housing increases, but we are seeing solid property prices and steady rental income. Jews from around the world continue to buy real estate in Israel as their security against increasing anti-Semitism and to fulfil their dream of retiring to the Holy Land. As long as the rental income remains high enough to offset the costs of their investment, they will be happy to buy to let the real estate that they hope will one day become their home.

Dealing with Israeli Contractors

If you call up an Israeli contractor for a price, hearing your accented Hebrew will probably add 20% to his regular fee!  As an experienced Israeli property manager and qualified lawyer, Shaun Isaacson has a clear advantage in hiring and supervising Israeli contractors.

When organizing and overseeing renovations and repairs in the properties that he manages, Shaun knows that he gets a better deal than his clients would have gotten for themselves. “I have seen how the price of a project can vary depending on the nationality of the client and the neighbourhood in which they live. Contractors will often take advantage of your accent and your address, thinking that you are a wealthy foreigner who can afford to pay more. Also, because I manage multiple properties, I can negotiate better prices than a homeowner, because companies want repeat business. This also motivates them to work faster and do a better job, because they know I will not hire them again if I am dissatisfied.”

In addition to Hebrew fluency and native negotiation skills, Shaun has the advantage of extensive experience in working with Israeli buildings, which are often built differently from his overseas clients’ home properties.

“Most Israeli buildings are made from poured concrete and they are often susceptible to cracks and water damage. The problem with leaks in concrete is that the water can enter at one location and seep through a crack somewhere else. Finding the source of the problem can be a game of trial and error, causing extensive damage to walls or ceilings in the search for the source of the leak. We have often brought in a company that uses an x-ray machine to find the crack in the pipe or the concrete and diagnose the problem. This service is costly but it cuts out the expensive guessing games and helps to minimize the repair costs.”

In one property managed by Creative Estates, it became clear that they had an electrical problem throughout the house. An old water leak had caused corrosion in the wires, and the fuses kept short-circuiting, which suggested that the wattage was too low for their electricity usage. Shaun’s team of electricians surveyed the property and recommended changing the spot lights (over 50 of them) in the ceilings throughout the house to LED lights, in order to reduce electricity consumption. They identified several problems and fixed them, without the unnecessary expense and disruption of rewiring the entire house.

In another example of how creative thinking can save Shaun’s clients money, the owners of a different home called in a swimming pool company who advised them to dig up the garden and install a cement pool, which would require building permits. Instead, Shaun and his team recommended installing a deck with an integral plastic pool which did not require permits. “The pool company had a standard way of working but, by looking at the problem from a different angle and thinking outside of the box, we saved our client 40% of the installation cost.”

Shaun understands that his job as a property manager includes managing construction and renovation projects, so he does not charge an additional management fee for this work. He supervises the contractors himself, which saves his client the cost of bringing in a site manager. “I have built up a team of highly skilled plumbers and electricians, builders and painters, who work on the properties that I manage. Not only can I rely on their honesty and professionalism, but if anything goes wrong, they know what to fix and they don’t quibble about putting it right. Our clients know that we will manage the entire project from start to finish, saving them money and stress.”

For more information about Creative Estates property management service in Israel, contact Shaun Isaacson at or on +972 52-652-1096. We will give you a price quote in complete confidence and without obligation.

The Truth About Israeli Real Estate Prices

Stories in the media about falling Israeli property prices look like good news for buyers and bad news for investors, but do these statistics tell the true story?

To paraphrase Mark Twain, reports of the demise of the Israel property market have been greatly exaggerated!

While the Ministry of Finance reports that real estate deals dropped 15% in the last quarter of 2016, demonstrating a cooling down of the Israeli property market, and the Central Bureau of Statistics’ report showed a 1.2% decline in the housing prices index at the end of 2016, but another report by the Appraisers Association shows that average apartment prices rose 1.7% during the fourth quarter.

So who and what should investors believe?

Israel’s Finance Minister Moshe Kahlon is under pressure to show that his policies have helped to reduce housing prices, but a closer look at the figures shows that the facts do not support this claim. The cabinet decided several months ago that they would only publish house price data from the Central Bureau of Statistics (CBS) and not from Israel’s Real Estate Appraisers Association.

The chairman of the Appraisers Association, Ohad Danos, is quoted as saying that the CBS index showing a fall in house prices in December 2016 is misleading. The Association’s own survey shows continued price rises among new and second-hand four-room apartments in 16 cities. They say that prices rose during the fourth quarter of 2016, averaging 1.7% higher than the previous quarter. They also compared this period with the corresponding period in 2015 and found an average 8.3% increase in housing prices since last year, with the highest rise being 13% in Tel Aviv and the lowest 2% in Haifa.

It is important to note that the Appraisers Association survey looks at the average price of four-room apartments in specific cities, but prices can vary between different neighbourhoods. They reported on the standard deviation for each city, showing that prices varied by 30% between different areas of Tel Aviv, and by 20% in Netanya and Jerusalem.

Analysts say that while the CBS survey is more comprehensive than the 16-city survey by the Appraisers Association, it is skewed by the inclusion of buyer fixed price deals. This is a system of housing project tenders that was introduced by the government to encourage contractors to build cheaper housing. They compete to submit bids for new housing projects that are lower than the maximum price set by the government. In one new Ramat Beit Shemesh project, for example, the tender achieved a 17% discount on local market prices.

Comparing the CBS and Appraisers Association figures for a specific city, Danos points out that fixed price tender sales accounted for 25% of all deals in the city of Rishon Lezion during the last quarter of 2016. Such deals are clearly skewing the picture, and Danos claims that without these housing project tenders, the Rishon Lezion real estate market would have shown a 1% rise in prices instead of a 6% decline. It is clear that including these government tender projects in CBS house price statistics gives a misleading picture of an overall fall in market prices, which is what the government wants its voters to see.

The CBS survey also points to a sharp fall in the purchase of new homes by first time buyers, but admits that many young couples are holding out for buyers fixed price tender projects. Building low-price housing is clearly good news for young Israeli couples, but it should not disturb overseas investors unduly. The overall housing market in Israel remains strong, with core demographics for marriage rates and expected Aliyah from Western countries continuing to drive demand for residential property.

According to government statistics, home purchases for investment fell 27% in the fourth quarter of 2016 and made up only 17% of all residential apartments sold. These figures compare purchase data with the previous summer quarter, which was a stronger season for the real estate market, and not the last quarter of 2015, which was similarly weak.

Those realtors who are talking about Israeli property prices starting to drop may be trying to drum up business in a slow winter market. They point to an increase in mortgage interest rates, an increase in purchase tax to 8% in July 2015, and a new tax on owning a third housing unit, due to come into effect on April 1, but most believe that that the overall trend is not changing. Some realtors talk anecdotally about sellers having to reduce prices to sell their properties, but admit that sellers may have unrealistic expectations and their asking prices may have been over-inflated.

The Appraisers Association survey of 16 Israeli cities shows that in the last quarter of 2016, average apartment prices increased by 4% in Holon and Ashkelon, 3% in Netanya and Kfar Saba, and 2% in Ashdod, Modi’in, Ramle, and Tel Aviv. Average increases in prices were recorded as 1% in Beer Sheva, Jerusalem, Petah Tikva, Rishon Lezion, and Rehovot, and there was no change in average housing prices in Haifa, Herzliya, and Eilat compared with the preceding quarter.

To quote Mark Twain again: “There are lies, damned lies, and statistics

Opportunities in Central Israel

While Israeli politicians talk about developing the country’s northern and southern peripheral cities, there is still plenty going on in the centre of the country. New residential developments in Netanya, Herzliya and Ra’anana offer great opportunities for investors.

Netanya is one of the fastest-growing cities in the Mercaz (central) area, with plans to expand to 350,000 residents by 2020. There is new construction in the east of the city in Kiryat Hasharon, and also in Ir Yamim, the new coastal suburb located to the south of the city center, near Ramat Poleg.

Ir Yamim has been planned to include 4,000 residential units with excellent facilities and beautiful surroundings. It is bordered by the Mediterranean Sea, the Poleg Nature Reserve to the south, and the Irusim Nature Reserve inland. It is also conveniently located near the Poleg junction, with excellent transportation links to Tel Aviv and other cities.

There are plans to build hotels in Ir Yamim to take advantage of its beach access. Unlike the northern and central Netanya beaches, there are no cliffs to navigate when approaching the beach from the town. The municipality is constructing cycle paths and promenade routes along the beach, making it a truly accessible coastal resort. Apartments in Ir Yamim are sure to attract high rents, whether as holiday lets or year-round accommodation for those who enjoy the sea.

Herzliya has always been one of the most desirable addresses in Israel, and recent developments are likely to increase demand. Premier real estate along the shoreline has been planned and designed to combine prestige housing with a beach front hotel, restaurants, cafes and water sports facilities. In Pituach by the Sea, the traffic is routed underground and there are landscaped paths for pedestrians only, linking public parks and community facilities. It is hard to believe that this green paradise is located just a few minutes’ drive from Tel Aviv! The entry prices for these residential projects are steep because Pituach by the Sea will soon become one of the most sought-after locations for wealthy Israelis and expats alike.

Neve Zemer is the new suburb of Ra’anana currently under construction. The city has always been popular with Anglo-Israeli families and those who appreciate its clean streets and well-run urban facilities. Today middle-class Israeli and French families are choosing Ra’anana because of the high standards of its schools and its tolerant traditional Jewish atmosphere – restaurants and shops on its main streets are all closed on Shabbat. This new northern neighborhood will enable thousands more families to enjoy an excellent quality of life. Neve Zemer is being planned with landscaped open spaces, recreational facilities and urban entertainment centers for residents of all ages.

These three examples of high-quality residential developments demonstrate confidence that demand remains strong at the top end of the Israel real estate price range. Many mid-range developments are underway in other central areas of Israel. If you are interested in investing in residential properties in Central Israel, with expert management services and excellent rates of return, speak to Shaun Isaacson at Creative Estates Israel today.