In Israel, the past three months of conflict and uncertainty have culminated in a collective challenge that has shattered our perception of time and normalcy since the unexpected Hamas attack on October 7. The war in Gaza has not only affected Israelis, but Jews around the world, leading to rising anti-Semitism and an uneasy sense of security.
Looking ahead to 2024, the question arises of how war will affect Israel’s economy. “War will have serious negative effects in the short term, but it will also provide opportunities for growth after the conflict,” said Ayelet Gonen Brosh, co-owner of the Brosh Group, known for its housing projects in high-demand areas of Israel.
34-36-38 Bialik Tel Aviv. Image for illustrative purposes only. (Courtesy of 3dvision LTD)
Israeli residential real estate market – distinctive features
Real estate is a significant cultural and social issue in Israel, as evidenced by the high homeownership rate of almost 70 percent.Despite a decade of rising prices, debates about real estate remain central to Israeli discourse.
Demographically, Israel’s population growth rate of 2.2% is significantly higher than in other developed countries, making it an important driver of housing demand. This growth is driven by longer life expectancies, higher birth rates, and a cautious but steady increase in Jewish immigration around the world. Recently, a rise in anti-Semitic incidents has sparked careful discussion of Jewish immigration to Israel. Another distinctive feature is the high population density in the Gushdan region and central Israel, with significantly better access to transport and jobs than the northern and southern regions of the country.
“Taken together, these trends suggest that demand for housing is consistently strong and outpacing the pace of construction,” explains Orad Yitzhaki, CEO of Brosh Nir Entrepreneurship. “Furthermore, high-demand centers face a severe land shortage and aging infrastructure. Because of the war, we expect many border residents to seek housing more centrally, further increasing demand in areas where supply is already limited.”
34-36 Bloch Tel Aviv. Image for illustrative purposes only. (Courtesy of 3dvision LTD)
Israeli house price trends
Over the past decade, Israeli home prices have risen by more than 80 percent, driven by unique market dynamics and a long period of zero interest rates that fostered cheap lending. A recent surge in interest rates, part of an effort to combat inflation in the country, has made it harder for developers and buyers to secure financing, slowing construction starts and discouraging buyers.
A closer look at recent sales data reveals the resilience of the market. For example, the number of new home sales in October 2023 was 930, in contrast to the 2,004 sold in the same month last year, indicating a decrease of more than 50%. Despite this noticeable stagnation in the market, a significant drop in home prices did not materialize. Current data shows that the mortgage market has returned to pre-war levels, with home prices up 2% since the beginning of the year and a significant increase in the number of transactions. According to the Central Statistics Office, approximately 21,580 apartments were sold between December 2023 and February 2024, compared to about one-fifth of that between September and November 2023, indicating that buyers are returning to the market.
16. Maimon Fishman Tel Aviv. Image for illustrative purposes only. (Courtesy of 3dvision LTD)
Brosh Group Predictions
“Long-term, Israel’s housing demand exceeds its supply by approximately 20,000 units per year. The cumulative housing demand shortfall is estimated at 200,000 units, suggesting a continued upward trend in prices,” Orad Yitzhaki predicts. “With expected interest rate cuts and a stable security situation, we expect buyers to return to the market in a significant way, as data from recent months has shown,” he adds.
Evolving from a construction company to a leader in residential projects in Israel’s major cities, Brosh Group boasts a notable track record that includes significant developments such as the Grand Mall in Beersheba, Ashdod Asta Hospital, Ir Yamim Mall in Netanya and Avnet Tower in Petah Tikva. In 2009, the company shifted its focus to launching residential projects in Israel’s major cities of Tel Aviv, Herzliya and Ramat Hasharon. Brosh Group stands out in the real estate sector as a company that combines both entrepreneurial spirit and execution. The company offers its clients peace of mind and ensures full synergy in the projects it leads.
Looking beyond the economic analysis, a key aspect emerges: living in a way that meets the demands of 21st century life, especially in urban centers such as Tel Aviv, is realistically achievable primarily through new builds. Recent conflicts have highlighted the importance of providing protected spaces within apartments, driving demand for new apartments. Moreover, the need for new builds is not just a response to war; there is an increased demand for features that enhance urban life, such as common areas for community use, green and energy-efficient buildings, and high standards of building specifications. These are often found in new housing projects. This trend highlights a broader change in housing preferences and highlights the importance of modern amenities and sustainable living.
2-4 Louis Marshall Tel Aviv. Image for illustrative purposes only. (Courtesy of 3dvision LTD)
Symbolizing this trend are projects like Tzahara Towers in Tel Aviv, where only a few excellent apartments remain available for immediate occupancy. Other notable projects include Louis Marshall, Brock and Fishman Maimon streets in Tel Aviv, and Bialik and Usishkin streets in Ramat Hasharon. These developments epitomize Brosh Group’s signature of showcasing a striking design ethos while seamlessly blending into the existing urban landscape. They offer an urban yet tranquil residential experience, and are all built to the highest construction standards. The blend of aesthetic appeal, functional design and high-quality construction reflects the Group’s commitment to excellence in urban development. With this in mind, one of the most exciting projects on the market is “Usishkin 74” in Ramat Hasharon. This intimate building is just four floors high and offers very spacious, well-designed apartments, a rare find in such a central location.
“The love affair with real estate is a consistent trend in Israel, as evidenced by the regular debates about house prices,” concludes Ayelet Gonen Brosh. Despite headwinds at the start of the war, she expects the upward trend in home prices to strengthen again. This outlook speaks to the resilience of Israelis and the local real estate market, which are poised to grow amid a changing economic and geopolitical landscape.
More information: Brosh Group
This article was produced in partnership with Brosh Group.
