Israeli real estate prices still rising in 2011

According to independent experts prediction, real estate in Israel – both for rent and for sale – will continue to go up. Economists of the largest Israeli bank Hapoalim published forecast of trends in the property market in 2011.

Leading economists and experts say: despite all the affords of the Israeli Government, the Central Bank and the Ministry of Construction taken over the next year, significant reductions in home prices is not expectable for upcoming year .

According to the data provided by Israeli Ministry of Construction, in 2008, the average monthly payment to the bank for a mortgage loan amounted to 3,000 shekels, the end of 2010 payments grew to 4.800 shekels. Experts predict a further rise in price of real estate and mortgage loan growth of 3 per cent during the year. Thus, if today’s average mortgage payment on the court is 4.800NIS a month, then the end of 2011 it was 5.5 thousand shekels. So , home rent prices will continue to rise.

Experts believe that even if real estate prices stabilize, rental prices will still continue to grow. In January 2011 is also expected in council tax increase to 1.4 % for all the settlements in Israel. In addition, within 2011 the size of the municipal property tax could be revised again, and bills could run higher by an average of 7 %. According to all the leading specialists in the real estate market in Israel, house prices in Israel will only fall in case that global solution is found that would significantly expedite and increase the construction volume in Israel.

However, according to the Central Bureau of Statistic, 30% of home buyers in Israel are investors. Although the rental return is quite low, at a gross 3-4%, this income is not taxed up to a threshold of NIS 4,700 a month. It also provides a straightforward and understandable investment model, without the volatility inherent in investment in the capital market. Furthermore, in the past two years, investors have discovered that they can make a handsome profit on the differential between the purchase and sale price, irrespective of rental income made in the interim.