Tel Aviv – A.K.A the Bubble?

Summer 2012 is coming to an end; the days are nicer and much cooler and it is the ideal time of the year to stroll down Tel Aviv streets.

As we approach the end of summer, those working in the field of real estate face that “BIG” question of how do we sum up the “HOT” season?

We had a very hot summer indeed! Geopolitical conflicts alongside rising prices and the reality of global financial crisis all created a sense of uncertainty. And yet, despite the headlines, it was a good season for the Tel Aviv real estate market overall.

Over the past 12 months, housing prices in Israel rose at a nominal rate of 1.2% and at a real rate of 0.1%. With the decline in mortgage interest rates, the decline in the unemployment rate and the average wage increased conditions of home buyers improved, causing the volume of real estate transactions to remain high during July and August in relation to last year and the first quarter of 2012. The amount of new mortgages hit new record levels in August with 6.3 Billion NIS of mortgages being issued in that month alone.

So in overall, the market remained steady, prices didn’t go down as everyone predicted and hoped for and despite “high prices” and the so-called “inflated market”, the Tel Aviv real estate market this summer has proved many of us wrong, mainly those disappointed savvy buyers who were looking for that major price fall.

When I am asked where our market is heading to, I do not have an answer. I cannot predict the future and cannot guarantee prices rising or falling. But I do know this – Tel Aviv offers great living conditions, from warm weather to chic café culture, from fine dining to invigorating night life, Tel Aviv has turned into an international city where people from all over the world are flocking to live here; for the past few years it has maintained a steady “high demand” rhythm and as long as that demand remains, the market will keep a steady increase in prices.