If you’re one of the people that believe that sooner or later the prices will go down (I know a few), well, you might be right eventually and temporarily but probably not.
Why?
Did the prices go down during the Second Lebanon War in 2006? NO
Did the prices go down during the Subprime Crisis in 2008? YES (for six months on luxury assets only)
Did the prices go down during the Cast Lead Operation in 2009? NO
Did the prices go down during or after Operation Protective Edge in 2014? NO
Did the US make it very hard for almost 50% of the Jewish population (American Jews) to bring money to Israel?
Did the Israeli government choke the market by raising the purchase and betterment taxes?
Yes and yes is the answer. The prices have pretty stabilized with and upward trend. In some areas like Jerusalem, prices have recently slightly gone up and in Herzliah Pituach they’ve gone significantly down. Herzliah Pituach is an exception due more to a trend.
People prefer to live in luxurious towers than in private homes.
So what is the secret of Israel’s residential real estate marker resilience?
Almost 67% of Israelis live in a property they own.
No wonder! There are less speculation prone properties in the market and therefore people do not sell their own property at a below-market price unless they are under true distress. This figure has grown in the last 5 years by 6%. The economy is very stable and growing, the Shekel is very strong which makes it hard on owners to be distressed. There might be (G-d forbid) another military operation in the near future, so there are no signs of the prices going down.
