What does a million shekels buy in today's market?
This week The Marker ran an article seeking to answer the question, "What sort of apartments can you still get for a million shekels?" The following is my translation:
About 15 years ago Yariv bought a small apartment in a new neighborhood in Bakaat Ono [exclusive neighborhoods adjoining Tel Aviv] for NIS 860,000. The years passed, the neighborhood developed and prices multiplied. Today an apartment like this is worth NIS 1.55 million and to the extent that it is renovated the value increases even more.
Twelve years ago Yossi and Naomi bought a small apartment in Tel Aviv for about a million shekels. Five years ago they sold it for 1.6 million and bought a small piece of land in the Sharon and built their house which is now worth about three million shekels.
These examples are not unusual in the local landscape. If ten years ago it was possible to acquire a nice flat in the suburbs of Gush Dan [the Tel Aviv metro area] for a million shekels or even a bit less, today this is not at all an easy task.
According to the data the most expensive apartments are sold in Tel Aviv: the average price of an apartment is NIS 1.92 million, forty-four percent higher than the national average. The lowest prices are listed in the northern district [north of the Haifa metro area] where the average apartment sells for NIS 815,000 or 39% below the national average.
So are million-shekel transactions rare? Not so much, according to the data of the Housing Ministry. Amonsgt the total of residential transactions for the period of January to October 2014, 38% were for a value of up to one million shekels, 34% were between one million and 1.6 million shekels and the remainder were transactions in excess of NIS 1.6 million. With respect to transactions for new construction only 41% fell in the million to 1.6 million range and only 19% of transactions were for one million shekels or less.
Where is it possible to buy a flat for a million shekels? Just about everywhere. The problem is the big differences between the apartments in the various areas of Israel. Within the space of half hour to an hour's drive one finds vast disparities in area, age and condition of different apartments. Until the government is able to put forth operative plans to reduce housing prices here are a few examples of both old and new apartments that one can purchase today for one million shekels.
location: Rimonim [a West Bank settlement northeast of Ramallah] in the Tribe of Benjamin Regional Council; area: 245 square meters with a 400 square meter yard; 5 bedrooms; in addition: this is a leased property which yields a montly rent of NIS 3,700; price: one million shekels
location: Shocken Road; first-floor unit; area: thirty square meters; efficiency apartment; small balcony; price: NIS 900,000
Harish [east of Pardes Hana, north of Baka-el-Gharbiya, located within the "little triangle" of Arab vllages adjoining the northwestern edge of the West Bank]
location: project "Lev Harish" [heart of Harish]; new construction; area: 93 square meters plus 12.5 square meter balcony; three bedrooms; price: NIS 960,000
location: Hess Street in the Upper Hadar neighborhood; second floor in a three-storey building; no elevator; area: 85 square meters including the balcony; two and a half bedrooms; price: NIS 925,000
location: the Jezreel Quarter neighborhood; new construction; area: 103 square meters plus 13 square meter balcony; 3 bedroom; prices start at NIS 950,000
Ma'alot Tarshiha [east of Nahariya and just a stone's throw south of the Lebanese border]
location: new project in the Pine Hill neighborhood; area: 107 square meters plus 15 square meter balcony and 30 square meter yard; 3 bedrooms; price: NIS 890,000
Lod [the most impoverished and crime-ridden city in central Israel]
location: Decker Street in the Forest Gardens neighborhood; area: 87 square meters; 2 bedrooms; third floor in a nine-storey building; price: NIS 960,000
Harish [see remarks above]
location: new project "Duna in Harish"; area: 100 square meters; 3 bedrooms; price: NIS 1 million
location: Barakat Street in the Rotem neighborhood; 5 bedroom; 180 square meters on a 750 square meter lot; in need of renovation; price: NIS 920,000
link to the original article: http://www.themarker.com/markerweek/1.2733284
END TRANSLATION OF ARTICLE; The following are my own remarks and commentary:
This is clearly not a comprehensive compararive review of real estate prices across Israel. Indeed, Jerusalem isn't even mentioned. The authors are trying to make a point: Apartments in Tel Aviv are absurdly expensive and in order to get something decent at a fair price you have to search in some far-flung God-forsaken corner of the Promised Land. While this is a common perception amongst those living in the Tel Aviv metro area, it is not entirely accurate.
Let's shift our focus forty-five kilometers south along the beach from Tel Avive for a moment. How does Ashkelon stack up with the other comparables in the article? For NIS 1,050,000 you can buy a brand new 110 square meter apartment with a 10 square meter balcony in the Agamim project currently under development in the south of the city. For NIS 900,000 you can get a similary-sized unit in a ten or twenty-year old building in good condition within easy walking distance to the beach.
Why was Ashkelon excluded from The Marker's analyis? Because the presence of quality affordable housing within commuting distance of Tel Aviv is inconsisent with the narrative. Moreover, the massive development currently underway in Ashkelon is a recent development and the city has yet to penetrate the mainstream Israeli consciousness which still regards it as a marginal presence on the periphery. This psychological shortcoming of the Tel Aviv mentality is to the buyer's advantage.