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Where the Jerusalem Market Is Sitting: December 2022

The market is extremely interesting but challenging for those looking for apartments in the $1.5 million to $3 million range. There is extremely high demand despite an approximate 3% rise in the base rate in Israel. Despite this, I have seen very little effect on the general demand in the areas where I am working: Katamon, Baka, Rechavia, German Colony, Talbiyeh, and Greek Colony. People are obviously asking why this is. Let’s take a look.


The world is a volatile place currently—politically and economically. However, Israel’s borrowing rates are lower than those in the United States and Europe. It is still achievable to obtain a decent mortgage from what I am told by mortgage brokers here in Israel—fixed for a long-term fixed period at around 5%, which is generally quite a bit lower than in the U.S. This means that Israel is still not seen by people as a bad place to invest and borrow.

Another major factor is that Israel has a new government coming in that has a majority and—regardless of political opinions—this may mean more stability for a longer period of time. Relate this to the world, especially the United States where there seems to be a lot of uncertainty. Additionally, between the coronavirus and the war in Ukraine, world events have not led to a stable economy. Even with the instability in Israel politically, the market in prime Jerusalem areas for tick-all-box prime real estate, from what I have seen, has been going at nearly 20% a year for the last two years.

The events and climate mentioned above have led to many Americans questioning if they want to stay in America, or start planning their way over to Israel. For many people, the answer is that they are readying themselves by having that property in Israel, which leads to the issue of demand. For every person looking for a three-bedroom in a modern building, with parking, a sukkah balcony, storage and an elevator, your options include projects where we have maybe four to five suitable options. And if you would like a new but existing apartment, unless you would like to spend $2 million to $2.5 million on a 1250-square-foot apartment, it is extremely hard to find and you are going to see very few options. There is not enough supply to keep up with the crazy demand, and there is nothing I can currently foresee that could work as an easy solution.

If regular mortgage rates rise to 8-9%, that could be a driver of significant supply in prime Jerusalem neighborhoods or an unprecedented increase in building; however, I do not think it is realistic in the short to medium term. Economically, although we are in tough times, I do not think we have reached a point that is bad enough that it has touched the prime Jerusalem market. Where I work has a seemingly special demand for real estate not only based on economic decisions.

Market Conditions

Generally, the market is sitting extremely strong, and the thing I foresee is a potential stagnation of $3.5 million to $5 million deals in the market. That is an area of the market that may slow temporarily as people become tighter on their spending. Those buyers may drive the 1300-square-foot-apartment market further by dropping their demands as they wish to spend less. People are not over-leveraged here and generally have 50-70% mortgages that they have been paying off over the years. Even if the market dropped 15%, it would not be a massive push for people to sell. This is not like in the U.S. where it is common for some to have an extremely large mortgage and extreme price fluctuations are common. This is why I do not believe that prices of 1075- to 1600-square-foot units will drop. I could be wrong, but there is nothing current to my knowledge that is going to push people to sell.


Demand is not slowing and supply is not growing, so there is nothing in prime neighborhoods to back up the claim that prices are going to drop. Yes, prices are expensive at the moment, and yes, financing is more than the all-time lows we were enjoying, but if you want a home here in Jerusalem you are buying against the significant competition.

Remember, for all the economic woes, it sounds as if a large number of economists are expecting things to slowly stabilize over the next few years. Even stable rates that are higher but seemingly not rising would quite possibly drive buyers further into the market. By the time you wait for the market to drop you may well get a large surge in the opposite direction again. Therefore, if you can position yourself to buy, do not be one of those people saying “if only five years ago.”

Based on my client base, people are very much still in the market. On my trip to Toronto and America this past week, we had huge events with some as large as 40 people, plenty of whom were serious clients ready to buy, and some that were looking to buy in the near future. These lists of people are growing exponentially every month, and as long as growing demand remains and increases from the U.S., the market in my opinion will remain buoyant.

For those serious about buying, the thing to do is to start the process to look for properties now, before even more demand pushes prices even further.

This article is based on the opinions of CapitIL Real Estate CEO & Co-Founder Ben Levene. Ben Levene is a Jerusalem real estate expert with over 10 years of experience, specializing in helping Anglos purchase real estate in Israel. To start your Israel property search, please contact Ben at +972-53-822-4336 or [email protected].

By Ben Levene

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