Israeli Housing Prices Expected to Rise Within 18 Months

Housing prices in Israel are predicted to increase again within approximately a year and a half, according to Avi Badlov, head of the mortgage division at Mizrahi Tefahot Bank. While no significant changes are expected in the short term, Badlov anticipates a trend reversal in about 18 months, driven by a combination of factors including a continued decrease in interest rates, stabilization of the security situation, and a slowdown in new construction, particularly in central Israel. He also noted that investors may shift funds from the stock market, which has seen significant gains, back into real estate, thereby boosting demand and pushing prices upward, especially in high-demand areas.

Badlov observed that the housing market is not uniform across the country, with price increases in Jerusalem contrasting with a decrease in Tel Aviv, partly due to a large supply of apartments. He also highlighted increased activity from foreign Jews, motivated by rising global antisemitism, who are often purchasing properties together in the same neighborhoods or even entire buildings to maintain a sense of community. Mizrahi Tefahot Bank has prepared to cater to these clients with specialized services.

Stepak pointed to immigration levels as a key factor, expressing pessimism about a massive influx from Russia and suggesting the next major source of immigrants might be the US and Canada. He also expressed optimism about urban renewal and the potential for institutional investors in the rental market, while acknowledging that interest rates have fueled mortgage increases and that housing affordability remains a critical issue.

Badlov urged policymakers to encourage apartment purchases in peripheral areas through direct incentives, infrastructure investment, and enhancing quality of life. He proposed grants based on location, investment in industrial zones, education, culture, and transportation, and suggested increasing financing ratios and offering tax benefits for purchasing in these regions to make them more attractive alternatives to living in the center of the country.