Favorable Dollar Strength
At the outset of 2022, the value of the dollar surged, enjoying a remarkable 20% increase. Real estate prices in prime areas of Jerusalem have remained relatively steady during this period. Although there hasn’t been a rapid increase in prices, they haven’t dropped either. This equilibrium is beneficial for potential buyers, as it means you’re acquiring property at a stable cost while benefiting from a 20% enhancement in your purchasing power. The present value of the dollar might fluctuate in the future, but capitalizing on its current strength can be a strategic move, particularly for American investors.
Advantageous Interest Rates
While global interest rates have climbed over the past 18 months, the cost of mortgages, e.g., the rates, are notably lower than those in the United States. Buyers have the opportunity to secure long-term interest rates (subject to qualification) for a period spanning 20 to 25 years at a rate of 4.5 to 5% fully fixed. This rate offers security and predictability, as you’ll know precisely what you’ll be paying over the next quarter-century, irrespective of market fluctuations. While some speculations hint at gradual rate decreases over the next 1-1.5 years, nothing is certain. By purchasing now and locking in the y43z rate, you shield yourself from the uncertainties of future market dynamics.
Persistent Supply Challenges
In the prime neighborhoods of Jerusalem, the supply-demand equation continues to be imbalanced, leaning toward limited supply. There’s been no notable improvement in this scenario, no influx of properties hitting the market, and contrary to fears, there’s been no mass exodus of sellers due to market conditions. In fact, prices have remained steady or have even slightly risen, albeit not as rapidly as a few years ago. The market is marked by a high number of eager buyers and a scarcity of sellers. Developers are currently cautious about new construction due to the impact of global interest rates and rising building costs. This selectiveness in building leads to fewer new projects, and when they do arise, they’re snapped up swiftly due to high demand. Builders base their prices on recent sales in the vicinity, making it unlikely for drastic pre-sale discounts. Therefore, the scarcity of available properties and consistent demand contribute to upward price trends.
Waiting for the next two to three years to dive into the Jerusalem real estate market might not be the wisest choice. While my role as a broker naturally encourages investment, there genuinely exists a current opportunity to enter the market at a stable price point before prices potentially rise again. The 2024 presidential election in the United States could usher in another period of instability, emphasizing the attractiveness of investing in Jerusalem real estate. This heightened demand, particularly within the Anglo community, could be a driving force behind a substantial uptick in property prices in the coming years. It’s essential to remember that while this perspective pertains to select areas in Jerusalem, the basic principle of increased demand leading to higher prices holds true.
This article is based on the opinions of CapitIL Real Estate CEO and 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].