Tel Aviv Housing Spikes 18% in a Year

There was an 18% rise in the Tel Aviv housing market during a year, specifically between the second half of last year and the first six months of 2022.

This marks the highest rate of increase seen in the housing market since 2010. Moreover, the volume of outstanding mortgages also recorded an increase of 18%.

A report

Economists from the USB Bank published a special report in which they highlighted that this marks the quickest increase to have been seen in the housing market and mortgages in about 25 years.

A global real estate bubble index was also developed by the economists, which shows that the highest level of risks that can be seen currently are in Frankfurt and Toronto amongst all global housing markets.

The results of the report were from a study that had evaluated the prices of residential real estate in about 25 top cities of the world.

The cities that were evaluated in the study showed that between the last six months of 2021 and the first half of this year, there was an average rise of 10% in housing prices

But, it appears that the global housing boom is now drawing to a close.

Tel Aviv numbers

According to the results of the study, Tel Aviv saw its housing prices almost triple during 2001 and 2017. Not only did the purchase prices go up in the city, but the rate of increase in rent also kept up.

This reflected a shortage of apartments in Tel Aviv. In 2018, the housing market saw a short period of correction in which prices declined.

However, it did not take long for it to once more return to yet another series of price surges. Therefore, this has put the Tel Aviv housing market at a risk of being in a bubble.

External factors

It should be noted that there are external factors that have also had an impact on the housing market. For instance, global oil prices have prompted housing prices in Dubai to fall and rise in the last two decades.

Fortunately, the market came back to life in 2021 because of the frequent movement in oil prices as well as the result of higher immigration.

There was a 10% increase in housing prices in Dubai between last year and halfway this year. The last four quarters have seen rent exceed the rise in housing prices.

Therefore, the Dubai housing market is currently benefitting from a fair valuation. Yet, the same cannot be said for the housing market in Tel Aviv.

It should also be noted that the primary reason for the rate of increases is due to the low interest rates. This has resulted in higher purchase prices of houses pushing them away from rents and income levels.

Some cities have recorded increase in housing prices of 60%, even though the real income and rent only rose by 12%.

Israel’s central bank has been hiking interest rates, which has also impacted the housing market because it has pushed up mortgage rates.