Talk of a global recession is not affecting Israel’s real estate market. The sale of new homes in Israel is at an all-time high, and changes to mortgage policies will boost the market further.
COVID-19 has not dampened demand for property in Israel. In fact, the opposite is true. The Central Bureau of Statistics reports that 10,550 new homes were sold between August and October 2020, after a record-breaking June. Sales of new homes are actually at their highest level for the past 10 years. Topping the list of most popular cities was Ashkelon, followed by Beit Shemesh, Tel Aviv and Beersheva.
Increasing Demand for Homes
Israel’s demographics are feeding the demand for home purchase – our strong birth rates and high marriage rates are bucking the international trend. At the same time, thousands of new Olim are arriving in Israel each month despite the Covid-19 pandemic, including large groups of immigrants from Ethiopia and India in recent weeks. Although Aliyah does not directly impact house sales, because most Olim rent their first home in Israel, it boosts population figures and is further evidence of confidence in Israel’s economy.
Despite the second lockdown and the Jewish holidays, Israel’s banks issued more mortgages in September 2020 than any month over the past 10 years. The ending of the government’s Buyers Price Target plan, influenced the number of mortgage applications, together with low interest rates.
The Supervisor of Banks has helped by extending Israel’s mortgage holiday to help customers struggling with the economic fallout from the Covid-19 crisis. Repayments of mortgages and other loans can be extended until March 2021.
Helping Israeli Home Buyers
In a surprising move, the Bank of Israel announced in December that it is changing the rules for mortgages to make it easier for customers to take advantage of variable interest rates. Previously only one-third of a mortgage could benefit from a variable interest rate, and two-thirds had to be repaid at a fixed rate. Now the numbers are reversed – borrowers can link up to two-thirds of their mortgage to the variable prime-linked interest rate. This change is expected to lower the cost of mortgages in the short term at least, while interest rates remain low, and further boost home purchasing.
The strength of the Shekel against the Dollar clearly makes Israeli real estate more expensive these days for foreign investors, but there is no doubt that the property market remains strong, with many attractive properties on offer.
The Benefits of Buying Off-Plan
Creative Estates Israel works with the real estate investment experts of the Israel Property Network, who are currently recommending off-plan projects around Israel. These allow purchasers to put down as little as 20% of the purchase price of a new-build apartment now, with up to two years to raise the remaining sum for payment when the property is completed.
Such off-plan projects can appreciate in value by 25% between purchase and completion, allowing investors to benefit from a minimal investment with enormous returns. Renting out the finished property can help to finance the loan taken out to pay the balance of the purchase price, with Creative Estates’ team of experts managing the rental contract and taking care of the property to maximize the returns.
It is always a good time to buy and rent real estate in Israel. Talk to Shaun Isaacson, CEO of Creative Estates Israel, to find out more about the best options for you.