Israel has the highest population growth rate in the Western world

 

The Israeli real estate market will continue to climb in spite of inflation. 7 thoughts 👇

1. Simple supply and demand economics. In 2021 there were 63,000 construction starts, compared to at least 100,000 construction starts that the market needs to meet demand (according to the CEO of the Israeli Builders Association). True, you can take this number with a grain of salt but (see number 2 ...)

2. Israel has the highest population growth rate in the Western world. With over 3 children per mother on average, and with almost 40% of the population aged under 18, the next 20 years there will see many more singles, young couples and families that will need housing. And this without taking into account new immigrants and returning residents

3. The percentage of renters stands at 34%. That means 66% of the population are homeowners. In times of economic crisis (or in times of rising interest rates), investors are more available to sell investment assets. In contrast, homeowners who live in their own property will fight to keep it under their ownership. This means that only a third of the properties in the country may be sold for financial reasons only

4. Competition from investors abroad. There is no shortage of foreign investors vying for Israeli property, whether as holiday homes, investments or future residence - especially in high-demand real estate markets (Jerusalem, Tel Aviv, Netanya, Herzliya)

5. Extremely low mortgage risk in Israeli property market. The 2008 US real estate crisis occurred due to massive mortgage default in which people purchased real estate beyond their financial means due to extremely liberal mortgage terms on the part of the banks. Not here - Israeli banks minimize risk by demanding 30% down payments

6. Historical proof. In the last 40 years, the average price of an apartment in Israel has never dropped. At times the growth rate slowed, but the trend was always been on the rise. True, this provides no indication on the future but by comparison, the stock market's flagship index, the S&P 500, collapsed 6 times in that same period

7. Supply chain crisis driving up the price of construction materials. The war in Ukraine, the economic effects of the Corona, a decline in output of China's export market - all these and more have led to a spike in the price of basic raw materials. This drives up the price of building new buildings - regardless of the fluctuation in land prices