Connect with us

Hi, what are you looking for?

Jewish Business News

Business

UBS Says Tel Aviv Real Estate at High Bubble Risk

Tel Aviv

According to Union Bank Switzerland (UBS), Tel Aviv is at serious risk of seeing a real estate bubble burst in the near future. This is the first time that Tel Aviv was cited as a bubble risk by UBS and it came in eighth on the list behind major world cities like Frankfurt and Toronto.

Israelis have been complaining for years about the high price of rent and new homes. It is part of the overall problem of the country’s high cost of living. New apartment buildings are going up everywhere in areas like downtown Jerusalem. But these all seem to be luxury buildings whose apartments usually get bought by absentee wealthy foreign owners. These landlords tend to then sublet the apartments as vacation rentals. This exacerbates the problem of the high rents that average Israelis must pay in the cities.

Please help us out :
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at office@jewishbusinessnews.com.
Thank you.

So, the average Israeli may not be concerned should the real estate bubble burst. In fact, they may welcome it. This could mean that new families looking to buy a home will be able to find bargains and even be able to afford to live in Tel Aviv once again.

According to UBS, housing prices in Tel Aviv roughly tripled between 2001 and 2017. Rents almost kept pace with the price increases, said the bank, reflecting a fundamental housing shortage.

After a brief period of correction in 2018,” explained UBS, “the market was back in another explosive phase of price growth. Between mid-2021 and mid-2022 alone, prices climbed by 18%, the highest rate since 2010. And outstanding loan volumes shot up by 18% as well, the fastest pace in 25 years. Consequently, the market ranks in bubble risk territory for the first time.”

Higher mortgage rates and stretched affordability did cause a brief period of correction, but by 2019, the market was back in another explosive phase of price growth. Between mid-2021 and mid-2022 alone, prices climbed by 18%, the highest rate since 2010.

Outstanding loan volumes shot up by 18%, the fastest pace in 25 years. “Consequently, the market ranks in bubble risk territory. A discussed relaxation of the maximum loan-to-value ratio for first-home buyers would heat up the market even more. However, the probability of a sharp but short-lived correction is high, if mortgage rates rise further.”

Newsletter



Advertisement

You May Also Like

World News

In the 15th Nov 2015 edition of Israel’s good news, the highlights include:   ·         A new Israeli treatment brings hope to relapsed leukemia...

Entertainment

The Movie The Professional is what made Natalie Portman a Lolita.

Travel

After two decades without a rating system in Israel, at the end of 2012 an international tender for hotel rating was published.  Invited to place bids...

VC, Investments

You may not become a millionaire, but there is a lot to learn from George Soros.

Copyright © 2021 Jewish Business News