Israel’s government are seeking to introduce measures to cool investor purchases in its property as unprecedented interest pushes property prices upwards.
According to the nation’s tax authority, figures show a sharp increase in investor purchases over the last six months. The number of private individuals owning five properties or more rose 6.4% to 5,760 individuals, representing a record high. Out of this number, 331 investors own 10 or more properties, an increase of 7% the authority said.
The reality is that even these statistics understate the extent of multiple home-ownership in Israel as figures don’t include companies, trusts, individuals registering property in the name of relatives, foreign residents or those who have inherited a home.
Benjamin Netanyahu’s last government took some measures to rein in housing prices although the programs either never got off the ground or did so slowly to no effect.
New finance minister Moshe Kahlon has vowed to put a lid on rising home prices, including plans to sell land to contractors and others at lower prices with savings being passed on to buyers when the units are sold.
Kahlon is also considering plans to impose heavier taxes on property investors in an attempt to reduce competition for buyers seeking a principal residence. Economists argue however, that reducing demand by investors won’t address the supply-demand imbalance as the majority of investors rent their properties out.
Israeli home prices increased 4% in the first quarter of this year, with the sharpest increases in Ashdod, Ashkelon and Jerusalem at around 7%. At the other end of the scale, one of Israel’s prime markets, Tel Aviv remained flat during the first quarter, finally showing signals of cooling.
Tel Aviv’s prime residential market has grown more than 75.4% in the last six years. The city’s renaissance over the last decade has brought accolades for its restaurants, nightlife and arts scene together with an ever-increasing population. Israel’s most densely populated city has an average of 7,522 people per square kilometre compared with 5,750 per sq km in the capital, Jerusalem.
Real estate professionals in Israel wait with bated breath to see what cooling measures will be implemented by the new government and how they will impact price appreciation. As a reasonably affluent country, property prices are consistently high compared with Europe. The national average rent in Israel is €630/pcm, with average prices at a median range of €3,548/sqm.
Source:: Property show rooms