How could the real estate market in Israel react during and after COVID-19?
This article is a collection of arguments put forward by different analysts of the real estate market in Israel. The future will tell us if their reasoning was right and realistic, but in the meantime, this gives food for thought.
Since the realization of the Project Mr KAHLON, "Meh'ir Lémichtaken" (acquisition aid for young first-time couples), the increase in taxes for investors as well as capital flight for investments outside Israel, the rapid increase in prices real estate in Israel has been held back for the past 4-5 years.
New bank reforms aimed at combating money laundering have made it harder for Israel to enter money and have naturally dampened foreign investors.
Following the political events of the past year in which Israel faced 3 consecutive parliamentary elections, the economy and real estate have been blocked.
To add to the already fragile situation, the arrival of the CORONAVIRUS put a knockout and caused the real estate activities to cease completely and possibly a recession; By analyzing other similar periods, we could say that real estate has stalled.
Due to the uncertainty of the moment, and pending the evolution of the situation, the tenants are much more reactive with regard to the termination of their rental contract, no longer being able to assume their rent, and this fact, the requests pour in to find replacements in the residences which will become vacant.
The owners having obtained, for the most part, 3 months of deferral for their mortgage remain indifferent to the requests of their tenants, and try by their personal cash, and various loans and aids to keep up the pace as best they can.
We will analyze different financial points -
1) Return to Israel:
The Diaspora ministry says that Israel must prepare for a wave of Alyah caused by COVID-19.
Last month we count the return of 500,000 Israelis to the Holy Land.
We also find that Jewish communities abroad have been hugely affected, and that even the United States, England and France are failing to cope with this period of crisis as effectively as Israel.
Different Jews from the USA have applied for Alyah and are looking for a pied-à-terre in Israel.
Despite the economic climate, we have counted 1,000 Olim Hadashim since last month.
2) Increase in apartment requests:
The increase in apartment requests following 3 major elements:
- The return of Israelis to the country
- The increase of the Alyah
- Containment causing increased birth rates and divorces
3) An opportunity for new income:
The COVID-19 epidemic has profoundly affected the household portfolio and caused a painful financial downturn; for good reason, billions have been withdrawn from savings plans, not being able to rely on stock market investments being too risky; the safe haven therefore remaining the investment in stone.
4) The return of investors following the Coronavirus:
Investment in real estate will continue to triumph and will come under pressure even among investors from abroad (in Europe and the USA) having difficulty managing their real estate at a distance following the closing of the borders.
The finance ministry is likely to provide relief on property taxes as well as reductions in mortgage interest rates to encourage investors to return.
After detailing the micro and macro economic data of the market, the Israeli client will probably be more hesitant and fearful when it comes to real estate investments.
However, once the market starts to go up and there are deals to be grabbed, we will naturally see the Israelis follow suit and get back into buying real estate.
In a few months, we will likely see massive demand for housing and house prices will rise again (as in 2009).
There will certainly be a big disappointment for those who wait and hope the market will go down, but as the saying goes "don't wait to buy an apartment, buy an apartment and wait" T. Harv EKER.
In our country, the market is only going up.
The conclusion regarding the question on real estate is therefore clear.
Let us not forget, Israel is a young and small country in which most of the Jews of the Diaspora want to give themselves the possibility of considering a future Alyah.
Among the most popular cities: Tel Aviv, Jerusalem, Ashdod, Natanya, Eilat, Ramat Gan, Bat Yam, Herzliya, Hadera.