Why I Would Seriously Consider Buying Property In Israel Today

By: Ben Levene

I’ve just spent a week in America, speaking to people about buying property in Israel, and I came away thinking about something interesting.

There are a few things about the Israeli property market that I don’t think enough people in America realize. And if you’re considering buying property in Israel, they could make a real difference in your decision-making process.

We spend a lot of time talking about the cost of real estate and understandably so. Jerusalem isn’t cheap, and when you consider the exchange rate between dollars and shekels, it can be daunting. But the purchase price is only part of the picture. There are three reasons why, if I was an American, I would consider buying property in Israel.

{Borrowing in Israel is Significantly Cheaper

I’m not telling anyone to take out a mortgage. Whether borrowing money makes sense depends on your financial situation and your plans. But if you’re going to take a mortgage to buy a property, regardless of where you live, it’s worth looking at where you can borrow the money most affordably.

In Israel, qualified buyers may be able to obtain mortgage rates of around 4.5%, with fixed-rate options for periods of 25 or even 30 years, depending on the mortgage structure and eligibility. In the U.S., mortgage rates have been considerably higher, often around 7%. That is a substantial difference.

When you’re borrowing large sums of money over many years, the interest rate can have a significant impact on your monthly mortgage payment and the overall cost of the property. It can also make it easier to enter the market without having to put all your available cash into the purchase.

Of course, mortgage terms depend on your circumstances, and the rates and financing available to you will vary. But the point is simple: borrowing money in Israel can be relatively inexpensive compared with borrowing in the U.S. I think this is something buyers should be paying more attention to. Don’t just compare the price of an apartment in Jerusalem with the price of a house in America. Look at the cost of financing the purchase as well.

Timing matters and you don’t necessarily want to wait until everyone else is buying. Unfortunately, the state of the world is a reminder that circumstances can change in an instant. When things are uncertain, it is natural for buyers to hesitate. People want to feel comfortable before making a major financial decision, particularly when buying property overseas. I understand that. But there’s another side to this equation. The current political climate around the world is far from perfect, but things are not at a point where people have stopped considering their options. If you’re thinking about buying property in Israel, I would seriously consider whether it makes sense to act while there are still opportunities available.

The reality is that if the situation deteriorates significantly and large numbers of people suddenly decide they have to move to Israel or secure a property there, demand will increase dramatically. And so will prices. You don’t want to be buying at that point.

When demand rises sharply, sellers become more confident, desirable apartments become harder to find, and negotiating becomes more difficult. You could find yourself competing with many other buyers for the same properties, potentially paying more simply because there are fewer options available.

Nobody can predict if this will happen, and I certainly don’t advise that anyone buys real estate out of fear, but I do think there’s an important distinction between buying when the situation is calm and waiting until circumstances become more difficult and suddenly there’s a rush of buyers.

If Israel is where you would like to live, spend the chagim, or buy investment property, it’s worth considering whether the current environment presents an opportunity.

Sometimes, the best opportunities come before everyone else realizes they want the same thing.

Anyone who has followed Jerusalem real estate over the past few years knows how difficult it has been to find the right property at the right price. Prices rose, good apartments attracted plenty of interest, and buyers often felt that if they didn’t make a decision quickly, somebody else would come along and buy the property.

Today, the picture is different.

In many parts of Jerusalem, prices have stabilized. In some areas, they have even decreased. We are no longer seeing the same consistent upward pressure that buyers have become accustomed to in previous years.

That doesn’t mean everything is suddenly cheap. Jerusalem remains an expensive market, particularly in the neighborhoods that are most popular with English-speaking buyers. But something has changed, especially in the second-hand market. For the first time in a long time, some sellers are more willing to negotiate. Buyers have an opportunity to look at existing homes, make offers, and potentially secure a better deal than they might have been able to a few years ago. And that is what makes the current market interesting.

There is still substantial demand for property in Jerusalem. People want to move here, make aliyah, buy a home for their families, and have a place of their own in Israel.

But many buyers are also cautious, watching what happens next before committing themselves. That creates an interesting situation: there are people who want to buy, sellers who are more flexible than they were previously, and properties that deserve a closer look.

Of course, every property is different. An apartment priced correctly in a desirable location can still attract multiple prospective buyers, while an overpriced property can sit on the market for a long time.

But if you have been looking at Jerusalem property for years and have found the market frustrating, this is a good time to take another look.

So, what would I do? After spending a week in America and speaking to many people, I keep coming back to these three points.

Borrowing money in Israel can be considerably cheaper than in the U.S. The current political climate means that it’s very difficult to time the market since circumstances can change rapidly, putting upward pressure on demand, which causes prices to rise. In Jerusalem, since prices have stabilized in many areas, buyers are experiencing better opportunities for negotiation than in recent years.

Of course, nobody can predict what will happen next, and not every property is a good investment. The right decision depends on your financial situation, your future plans, and the property itself. But if you’re sitting in America today and considering buying property in Israel, I would take a serious look at what is available. You don’t need to rush into a purchase, but I wouldn’t dismiss the opportunities in front of you simply because you are waiting for the perfect moment.

If I were in America today, I would seriously consider buying an apartment in Israel. 

Ben Levene, CEO of CapitIL Real Estate, brings over 15 years of expertise in the Jerusalem real estate market. For inquiries, reach out to him at [email protected]. Ben urges all prospective buyers to seek professional legal and financial advice before buying any property.