What a year it was in 2021. Looking back at 2021, we can summarize the year regarding real estate as becoming a sellers’ market. The prices went up in Israel by around 10% and in Jerusalem specifically around 9% at least. No one thought that this would be the outcome of a year filled with ups and downs with Corona, and closures in travel.
Sow how did this happen? We believe that Black Lives Matter had an influence on Jews around the world, and especially in the United States and Canada. Therefore, sellers realizing the high demand started raising their prices accordingly. A lot of sellers also took their properties off the market since they figured they could hold off on selling now and sell in the summer of 2022 for an even bigger profit.
So where did buyers end up buying in the end? A lot of buyers started looking into and purchasing new properties on paper. Buying a property that hasn’t been built yet or is in the middle of being built, and through a company kept the price at a decent level, allowing it to be more affordable for more buyers. With that said, buying on paper or via a company, meant getting all the amenities, such as, Shabbat elevator, private parking, storage, and balconies.
Another significant change that occurred in 2021 was the value of the Israeli Shekel becoming extremely strong, which inevitably lowered the value of the other currencies around the world. Therefore, the potential buyers had to add around 20% of his currency to meet the asking price in Israeli Shekel. In addition to this, the government raised the purchase tax for investors or people buying a second property from 5% to 8%.
With these two drastic changes occurring around the same time, it created a difficulty for the buyers to meet the extraordinarily high prices that the homeowners/sellers are requesting. We don’t know what kind of effect long term this will create on the market.
How will 2022 look? Will the market continue as a sellers’ market or shift to a buyers’ market, as it was pre-corona/Black Lives Matter.
Only time will tell!
