Following the Bank of Israel's most recent interest rate hike, Ynet examined the latest data published by the Central Bureau of Statistics (CBS) on the average prices of apartments in major cities in the first quarter of 2023.
More Stories:
The data was recently published as part of CBS's housing price index. Although the index remained unchanged in March-April, an analysis of the average housing price in the first three months of 2023 compared to the corresponding quarter of 2022 revealed that prices have climbed by nearly 10%.
According to the data, this represents an increase from an average price of NIS 1.8 million ($486,000) for an apartment at the beginning of 2022 to NIS 1.96 ($530,000) million in the first quarter of 2023.
Israel's most expensive cities
Out of the 18 major cities in Israel with a population of over 100,000 residents surveyed, Tel Aviv, unsurprisingly, ranked at the top with an average price of NIS 4.2 million ($1.132 million) - an 8.7% increase year-on-year from NIS 3.8 million ($1.026 million).
Prices in the city are so high that even small 1-2-bedroom apartments are priced at an average of NIS 2.8 million ($756,000), while 4.5-5-bedroom apartments will set you back NIS 6.3 million ($1.701 million).
Herzliya ranks second with an average price of NIS 3.4 million ($918,000). Since this is the first time the city has been included in the index, there is no previous data for comparison.
However, price hikes did not pass over the central city in 2023 and a standard 3.5-4-bedroom apartment in Herzliya is now priced at NIS 3.471 million ($937,000) on average.
Ramat Gan claimed the third spot with an average price of NIS 3.276 million ($884,000) - a whopping 28% increase year-on-year, the sharpest rise among all cities surveyed. A standard 3.5-4 bedroom apartment in Ramat Gan is still relatively affordable compared to Herzliya, standing at NIS 3.2 million ($864,000).
In Kfar Saba, the average price of an apartment stood at NIS 2.9 million ($783,000) in the first quarter of 2023 - an 8% increase year-on-year from NIS 2.69 million ($726,000). A standard 4.5-5 bedroom apartment will cost you NIS 3.1 million ($837,000) on average and apartments with 5.5-6 bedrooms will cost you NIS 4.1 million ($1.107 million).
In Jerusalem, Israel’s most populated city, the average price of an apartment stood at NIS 2.5 million ($675,000) in the first quarter of 2023 - a 4.5% increase year-on-year from NIS 2.3 million ($621,000).
In Haifa, the country's third most populated city after Jerusalem and Tel Aviv, the average price of an apartment stood at NIS 1.6 million ($432,000) in the first quarter of 2023 - a whopping 25.5% increase year-on-year from NIS 1.3 million ($351,000). However, you will be able to find a 1-2-bedroom apartment in the northern city for less than a million shekels.
Where did prices drop?
Ashkelon is the only city on the list where prices declined year-on-year, sliding 0.% from NIS 1.33 million on average in the first quarter of 2022 to NIS 1.32 million a year later.
However, while 1-2-bedroom apartments in the southern city cost around NIS 801,000 ($216,000) on average, and 2.5-3-bedroom apartments cost about NIS 992,000 ($267,000), the price for 5.5-6-bedroom apartments jumped 28.4% year-on-year to NIS 2.95 million ($796,000).
Lastly, the most affordable city on the list was Be'er Sheva, with an average price of NIS 1.17 million ($315,000), going up 5.2% year-on-year from NIS 1.11 million ($300,000). A 1-2-bedroom apartment in the city will cost around NIS 606,000 ($163,000), while a 2.5-3-bedroom apartment would cost you around NIS 848,000 ($227,000).
Size matters
Real estate appraiser Shmulik Cohen, said that "the CBS’ analysis of prices during the first quarters of 2022 and 2023 indicates a sharp decline in transactions alongside a continued increase in prices.”
“However, we can also see that the price changes differently in various cities according to the size of the apartment,” he added. “For example, in Ramat Gan, we see that the largest price increase was recorded in large 4.5-5-bedroom apartments, which accounted for one-third of the transactions in the previous quarter, thus affecting the average price in the city."
According to Cohen, "Ramat Gan seemingly benefits from the rise in prices and interest rates due to its neighboring city Tel Aviv, where 4.5-5-bedroom apartments are already averaging a price of NIS 6.3 million ($1.701 million), causing investors to look elsewhere to buy apartments. Similarly, in Haifa, we saw that larger apartments lead price hikes.”