The phrase "the state of Tel Aviv" refers to many things. In real estate, it refers mainly to the growing difference in housing prices between Tel Aviv and the rest of the country, especially the outlying areas. 30 years ago, average housing prices in Tel Aviv were 56% higher than in the rest of Israel. Today, the difference is 120%, according to the Central Bureau of Statistics.
1988 marked the transition from the previous years of hyperinflation, the First Lebanon War, and the bank shares crisis to the period of the great wave of immigration from the former Soviet Union in the 1990s, which caused a major rise in housing prices. This increase, however, was not uniform; it affected mainly Tel Aviv and the surrounding area. The result was that the difference in housing prices between Tel Aviv and the rest of the country widened in the mid-1990s.
The 1999 dot.com bubble pushed Tel Aviv housing prices up again, but prices then fell when the bubble was deflated, with the difference between Tel Aviv and the rest of the country dropping to 41%.
The development of the bubble and its rapid disappearance highlighted the gap in economics, finance, and high tech between Tel Aviv and the rest of Israel. This especially came into play in the first half of the previous decade. The Tel Aviv real estate market was the first to emerge from recession, and the gap between Tel Aviv and the rest of the country really began to widen in 2007, largely because the recession persisted in the outlying areas. The surge in real estate prices hit the outlying areas in 2009, while the government began to act, or at least to say that it was acting, to lower prices. Former Ministers of Finance Yuval Steinitz and Yair Lapid failed, while current Minister of Finance Moshe Kahlon only managed to halt the upward price spiral. Real estate prices in Tel Aviv now average NIS 2.7 million: 1.5 times the average in Jerusalem, 2.5 times the average in Haifa, and triple the average in the outlying areas in northern and southern Israel.
The state of Tel Aviv has completed its real estate triumph.
Published by Globes, Israel business news - en.globes.co.il - on April 1, 2019
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