Ra'anana and Herzliya Property Prices Stabilize, Herzliya Maintains 12% Premium
Translated & summarized from Bizportal by baba
Real estate prices in Ra'anana and Herzliya have stabilized over the past year, with minimal changes observed in comparable apartments. Herzliya maintains a 12% price premium per square meter over Ra'anana, a gap that has remained consistent. Advanced statistical methods show market stability, contrasting with simple median price increases. Factors like apartment size mix, high interest rates, and future supply are influencing the market.
The story in 6 lines · by baba
- Ra'anana and Herzliya property prices have stabilized with minimal changes in the past year.
- Herzliya maintains a 12% price premium per square meter over Ra'anana.
- Statistical analysis confirms market stability, countering median price increase trends.
- Smaller apartments skewed median prices upwards, masking actual price movements.
- Long-term apartment sales show similar appreciation rates for both cities.
- High interest rates and financing costs are impacting buyer purchasing power.
Real estate prices in Ra'anana and Herzliya have remained largely stagnant over the past year, with minimal changes observed when comparing similar apartments on the same street. An analysis of approximately 870 property transactions reported to the Tax Authority in the last six months, compared to the same period last year, reveals a 0% change in Ra'anana and a 1.3% decrease in Herzliya. These figures, within the margin of error, indicate a stable market in both cities.
Despite the overall price stability, Herzliya continues to command a premium of about 12% per square meter over Ra'anana for comparable apartments. This premium is not evident in simple median price comparisons, which showed an 11.5% rise in Herzliya and a 5% rise in Ra'anana. The discrepancy is attributed to changes in the mix of apartment sizes sold; smaller apartments, which sell for a higher price per square meter, constituted a larger portion of transactions in both cities, skewing the median upwards.
To account for these variations, the analysis employed three methods: statistical comparison of similar apartments on the same street, comparison of nearly identical apartments in the same building, and tracking of apartments sold twice. All methods pointed to the same conclusion: the market is stable. For example, a typical 4-room, 85-115 sqm apartment sold for approximately 3.16 million shekels in Ra'anana and 3.41 million shekels in Herzliya in the last six months, a difference of about 250,000 shekels, a gap that has remained consistent.
Further analysis of apartments sold within the same building revealed a median price per square meter decrease of about 4% in Ra'anana, while Herzliya showed stability with a 0% change. Long-term tracking of apartments sold twice over approximately ten years showed a consistent average annual return of about 4.3% in Ra'anana and 4.2% in Herzliya, suggesting that both cities have appreciated at a similar rate over time.
Neighborhood-level data indicates contrasting trends within each city. In Herzliya, prices in the Weizmann neighborhood dropped by about 6%, while the city center remained stable. In Ra'anana, the city center saw an 11% increase, contrasted by a 12% decrease in the Kiryat David Remez neighborhood. The article also notes that a new project in Herzliya with around 140 transactions contributed to a general increase in reported sales, though these were not included in the street-level analysis.
The current price freeze is attributed to high interest rates and expensive financing, which limit purchasing power, and to financing incentives offered by contractors for new apartments. Rental yields are also low, making both cities less attractive for investment. Future supply is expected to influence the market, with plans for thousands of new apartments in Ra'anana and significant projects in Herzliya, some dependent on transportation infrastructure.
