Is having the cheapest real estate prices in Israel an advantage or disadvantage for a city? Not being a city for the rich only is good, and having a variety of housing options for residents is good, but Haifa and Beersheva, the two large cities with the most inexpensive properties are in continual crisis. As a result of this crisis, the two cities have a large number of properties with little demand for them, a symptom of much deeper problems.
Haifa and Beersheva, the main cities in their areas, are distant from the center. Both have seen better days. Both of them have an abundance of old and cheap properties. Both have academic institutions and an entire student rental industry around those institutions. In Beersheva, it is neighborhoods close to Ben Gurion University of the Negev, in the center of town between the Gimmel, old Vav, and Dalet neighborhoods and the railroad tracks. In Haifa, it is mainly Ramot Remez and the Ziv neighborhood near Techion - Israel Institute of Technology, not far from Haifa University, and certain buildings in the new Romema neighborhood.
A random check by "Globes" of a number of the cheapest deals in Israel in January that were registered at the Israel Tax Authority shows just how dominant Haifa and Beer Sheva are in this aspect. There were 108 deals in Haifa and 103 in Beer Sheva at a price of less than NIS 1 million in January. Next on the list is Ashkelon with 47 cheap deals, Hadera with 24, Ashdod with 14, and Jerusalem with 12. The other major cities had only a handful of deals for less than NIS 1 million, and the figures suggest that some of these may have been registration errors by the Tax Authority, rather than real deals. The deals examined were solely for secondhand housing, not new apartments, many of which are being sold in the framework of the Buyer Fixed Price Plan.
Further support for the prominence of Haifa and Beersheva in the supply of cheap apartments comes from the Yad2 website. A check of the number of cheap apartments offered for sale from 2013 until January 2019 consistently puts Beer Sheva and Haifa at the top of the list. On January 1, 2013, for example, the three leading cities in the supply of cheap apartments - the supply is defined as the number of apartments published on the Yad2 website on the date in question - were Beersheva, Haifa, and Ashkelon. 29 apartments were offered for sale for less than NIS 1 million on that date in both Beersheva and Haifa. Trailing far behind them were Ashkelon (16 apartments), Tel Aviv (12), and Holon (11).
Beersheva, Haifa, and Ashkelon were also the leaders in the supply of cheap apartments in January 2019, but the numbers were far fewer: Beersheva led with 14 apartments offered for less than NIS 1 million, followed by Haifa with 10 and Ashkelon and Hadera with five each. The same decrease in the supply of cheap apartments occurred in other cities in Israel.
Beer Sheva: Not only investors
All in all, it appears that despite the similarity between the two leaders, there is also a substantial difference between Haifa and Beersheva. In the first quarter of 2019, 49 three and four-room apartments were sold in Beer Sheva at prices ranging from NIS 800,000 to NIS 1 million. Most of these were in the Buyer Fixed Price Plan framework, and the buyers were young couples.
"Investors aren't the only ones buying cheap apartments in Beersheva," says land appraiser Ohad Vertesh. "Because of the city's location and because the value of the land in it is relatively low, you can find cheap apartments being bought by young couples, and maybe also move-up buyers, not necessarily next to the university. Young couples can buy pleasant three-room apartments in a 40 year-old prefabricated building for NIS 600,000-700,000, and move-up buyers can find four-room apartments in an old building with an elevator in a neighborhood that's not so nice for NIS 700,000-800,000."
Prices in Haifa are much higher. Even in the Buyer Fixed Price Plan framework on a site that was once the Kiryat Eliezer soccer stadium, a four-room apartment was sold in the first quarter of the year for NIS 1.38 million.
On the other hand, there are quite a few cheap properties in the city, some of them in old neighborhoods in less demand on the slopes of the Carmel mountain range, such as Kiryat Sprinzak, the Yad Labanim area, Yizre'eliya, and so forth. Because of the city's hilly topography, even in the Carmel neighborhoods, which are better, there are old apartments whose tenants have to climb dozens of stairs or descend from street level, which lowers the prices by hundreds of thousands of shekels.
"There are few apartments on the old Carmel with prices of less than NIS 1 million, and those are especially small," says real estate agent Carmel Ada from the Carmel Center Real Estate Agency. "Most of the buyers of apartments for less than NIS 1 million are not older people; they are young people investing in a first apartment for NIS 600,000-700,000 and paying for most of it with a mortgage (and living elsewhere.)"
The trend in Beersheva and Haifa is the same as in the rest of Israel. Following the price rises in recent years, the figures show that the supply of cheap apartments is thinning out. In the central cities, it is difficult to find apartments for less than NIS 1 million.
Published by Globes, Israel business news - en.globes.co.il - on May 6, 2019
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