Prices rise: Sometimes prices for property in Israel stabilise. They don’t seem to go down, and over the medium to long-term, even when, as now, the economy as a whole is contracting in Israel, house prices seem to keep on rising. So there is never a good time to get into the market, but just know that if you delay it is highly likely that you will pay more for a property in Israel.
The price on paper is not the final price you will pay. There are significant fees and taxes to pay on purchasing any property in Israel, which require payment at the time of purchase. Cumulatively they can add substantially to the cost. And if you are buying a brand-new property, be aware of what is called “the construction index” which allows part of the payments by purchasers to rise to compensate building contractors for inflation in the costs of building supplies and labor through the lifetime of a project. Over a number of years, this can make a new property significantly more expensive than you first thought it would be.
Location, location, location: This is the single most important factor in determining the value of your property and whether it will work for you. Israel’s cities are a patchwork of neighborhoods which can be very different from each other. You need to understand the demographics and the amenities of where you are buying, not just to identify the city or type of town you would like to be in.
The number of rooms is not the same as the number of bedrooms: Properties in Israel are advertised based on a total number of rooms. But one of these rooms will always be the integrated kitchen and living room which forms the center of every Israeli home. So when you are looking at property details bear in mind how many bedrooms are actually included. And know that half a room is likely a room off a room which needs checking out to see how useable it really is.
The true running costs include things you may not think of. In any apartment block you will find yourself paying “Vaad Bayit”, a monthly charge which is used for the cleaning and upkeep of the block. If the block has shared amenities such as a gym, or a pool, this can be a significant amount each month. If you are on the ground floor, or in a house with a ground floor, you will need to get the pest controllers in at least once a year to kill off insects etc which will otherwise find ways into your home. If you live anywhere near the sea, assume that the effects of the salt air will mean that you need to redecorate outside space such as a balcony every couple of years and potentially renew your outdoor furniture. And be aware that Israel’s hard mineral-rich water means that sink fittings and machines which use water may not last as long as you expect.
Fixtures and fittings: When you buy in Israel, and often also when you rent, you cannot assume that you will get more than four walls. Your kitchen may well come without key appliances, light fittings will get removed, and everything that can move probably will. If you are used to moving home in a world in which this doesn’t happen, be warned, and negotiate with those from whom you are buying to purchase any fixtures and fittings you particularly want to keep.
Renting for a lifetime is not always a bad choice. Plenty of people do it given the need for substantial capital to buy and the non-availability of 100% plus mortgages. There are plenty of properties available to rent for multiple years – just watch for the clauses around rent rises, as like property prices, market rents are extremely upwardly mobile. Always get a lawyer to check the contract for you and be fully aware of exactly what you are signing.
The biggest pain in Israel’s property market may well be dealing with banks. For a country that is one of the global leaders in technology, Israel’s financial system is very low-tech in many ways. You will find you need to return to the world of banker’s cheques, bank meetings in person, and even sending through faxes, as well as dealing with very tight anti-money laundering regulations. It’s a key reason we set up IsraTransfer and one of the main sources of our clients’ satisfaction with our service.
There is a gap between completing on a property purchase and moving in. So you will be legally committed to buying a property potentially many months before you receive the keys, even if it is not a new property. Over this time period there are no guarantees of access to the property, and you will make various staged payments as per your contract. Summer is the most common time period for moving – between the end and the start of the school year. It’s not a problem – just something it is useful to be aware of and to factor in.
In Israel, everything and everyone is connected. Your neighbors matter, and you will have a relationship with them, for better or for worse. They can become your best friends, or a source of noise and interference you don’t want. Be sure to find out about any issues from those selling the property, and try to meet the neighbors before you firmly commit to a place.
IsraTransfer can act as your trusted partner to move your money into and out of Israel, offering better exchange rates than banks and a much smoother process. Find out more about us online at www.isratransfer.com
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