For the second year in a row, Tel Aviv was the second-most expensive city to live in among 62 European cities in 2020, after Paris, according to the accounting firm Deloitte’s latest annual survey of the European housing market. Deloitte’s Property Index, Overview of European Residential Markets also ranked Israel the fourth most expensive out of 24 countries.
The report estimated that in Israel a 70-square-meter home cost the equivalent of 9.2 years average salary, seven more months than last year. By that measure, Israel was the fifth-costliest country in which to buy a house, after Serbia, the Czech Republic, Slovakia and Austria.
In 2020 the average price for a house in Israel was 4,052 euros ($4,784) per square meter, but in Tel Aviv, in was 10,322 euros, a rise of 5.6 percent from 2019. The report found that despite the coronavirus crisis, prices in all the European cities surveyed rose sharply last year, except for Rome, where they dropped 3.1 percent.
By contrast, the report that for rents, Tel Aviv ranked only 15th most expensive, which for investors means that the return they earn is significantly lower than in other European cities.
The data also showed that Israelis paid more for mortgages than in most European countries: Israel ranked fifth for the cost of a home loan (2.9 percent), an average interest rate more than one percentage point higher than countries such as Britain, the Netherlands and Denmark, and almost two points higher than in Portugal, Slovakia and France.
But according to data issued last week by the Bank of Israel, interest rates apparently are not deterring Israelis: In June alone, a record 11.6 billion shekels ($3.5 billion) in home loans were taken out. To a large extent, this figure illustrates how overheated the housing market has become in recent months and the panic of Israelis rushing to buy homes for fear prices will only go higher.
Meanwhile, the number of construction starts and the amount of land being marketed by the government for residential development has declined in the last two years in the absence of state budget and a stable government.
The Central Bureau of Statistics reported last Thursday showed that home prices in the 12 months through April-May had risen 7.2 percent from the same time a year ago.