Tel Aviv, Ashkelon, Ashdod and Jerusalem are at the top of the list of cities where demand for apartments has declined following the war. However, since demand is spread across many localities, the impact will not be felt significantly in these cities, as well as in other cities – except for border settlements. A survey conducted by the Geocartography Institute shows that home prices are expected to rise, among other things because security measures in apartments, buildings, and the residential environment will need to be improved.
Regular examinations conducted by Dr. Rina Degani, an urban economist and one of the owners of Geocartography, show that demand in Tel Aviv has fallen by about half the rate of demand before the war: about 4,200 households are now looking for an apartment in the big city as one of the alternatives, compared with about 8,000 before the war. In Jerusalem, demand dropped by about 35%, in Haifa by only about 15%. In Ashkelon, demand decreased by about 20% and in Ashdod by about half.
The effects of the war are also felt with regard to demand by locality. Only about 9% of potential home buyers are confident that the war will motivate them to change their choice of locality in which they want to purchase a property, and about 22% think so (although not sure).
Buying apartments and the effects of the war, photo: Data: Geocartography Institute
In practice, about 5% of apartment seekers are sure that they will consider purchasing an apartment in a different locality than the one we examined earlier, and another 14% think so as well. 77% are sure they will continue their search for an apartment in their locality. Dr. Degani estimates that the expected impact on actual demand in each locality (not on the conflict line) after the war will not be great and will be dispersed, as mentioned, over many localities, some of them a little more in the center of the country.
Security cameras - above all
The events of October 7, and the war in general, highlighted the public's need for personal security – all the more so at home and in the residential area. About 33% of Israeli households believe that a sense of security is becoming a very important consideration when choosing a place to live, and it is even higher among home buyers.
What, then, will increase the sense of security in the building and the living environment? Dr. Degani emphasizes that all possible means to improve security in the place of residence are important to home buyers and they are also willing to pay for them. Connecting security cameras to a security center is the most important issue for security (62% ranked this item among the three factors that are important to them), followed by guard patrols in the vicinity (47%), bars (41%), adding security mechanisms to the front door and replacing it if necessary (39%), knowing that the building has someone who has a weapon (32%), a panic button from the apartment to a guard center (32%), an underground parking barrier (32%) or another item (6%).
Over 10 per cent are willing to allocate NIS 750 per month to increase their sense of security in their building and living environment. This willingness to pay is high in all sectors of the population, regardless of the economic level, even though it is a considerable amount, in relation to the fact that a large part of households pay a high mortgage every month, some have children in frameworks that require high payments, and more. Geocartography estimates that, in practice, a significant proportion of households will set aside a similar amount to increase security, although more than 60 per cent responded that they would probably not be willing to pay such a sum.
Dr. Degani notes that "following the war and the data that emerge from the survey, there is an immediate need for contractors to estimate the costs associated with additions related to security in the apartment and building. Among other things, there will be additional costs reminiscent of those that tenants or buyers were required to pay for the whole issue of sustainability, although the necessary security measures may be cheaper."
And what is the impact on the rental market? About 20 per cent of households currently have someone looking to rent an apartment. About 16% of those looking want to live in Tel Aviv, about 12% in Ramat Gan, and about 7% in Givatayim, the two cities adjacent to Tel Aviv. Demand in cities in the second circle around Tel Aviv ranges around 7%-5%, such as Herzliya, Rishon LeZion, Petah Tikva and Ra'anana. Each tenant is looking for an apartment in two localities on average.
Dr. Degani: "Following the war and the data that emerge from the survey, there is an immediate need for contractors to estimate the costs associated with additions related to security in the apartment and building. Among other things, there will be additional costs reminiscent of those that tenants or buyers were required to pay for the entire sustainability issue, although the necessary security measures may be cheaper."
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