Uncertainties abound on the subject of real estate investment. There are quite a few options, but at the same time, quite a few financial risks. Nonetheless, one thing is certain, that real estate constitutes an option, that is not only stable, but also profitable. People understand that it is not sufficient to rely just on the assured interest banks offer in various solid investment options, but that in order to reap significant profit, one must consider the entire picture and assess which opportunities are most relevant. Bearing this in mind, along with the fact that real estate investment is indeed lucrative, there is no escaping the necessity to address the following question: Is now the time to invest? At this point we shall explain why experts in the field not only think that this year it is worthwhile to do so, but that they are certain that it presents a rare window of opportunities.
An island of security – without extreme fluctuations
It is important to understand that in contrast to various other investment options, the real estate realm is perhaps the only one not sensitive to extreme fluctuations. Hence, though we are still deep inside the “Corona Era”, we can be certain that the value of the property purchased (or invested in) will not be lost, and will not plummet. There might be a temporary minimal drop in prices for a while, but if we wait a while, it is more than likely that the property will regain its value or rise above that. Therefore, if you are seeking a profitable and secure investment option at this turbulent time, the real estate realm undoubtedly constitutes firm ground.
Demand – the most significant parameter of all!
Irrespective of COVID-19, the undisputed fact is that demand for residential real estate has not only always existed, but recently has grown significantly and has become much more felt. Moreover, if we add to the equation the datum that demand exceeds supply, it becomes clear how investing in real estate constitutes a reliable and profitable option. Not only does this entail investment in a tangible property, and the real estate market is spared significant fluctuations, but the fact is the population growth rate is on the rise. What can one conclude from this? The high demand causes the value of property to be much more significant!
When projects are stuck, it is the investors’ gain
As abovesaid, demand far exceeds supply. To this, another parameter should be added to the equation: population growth is on an upward trend, while construction commencements have been significantly slowed. How can we explain this?
- Many entrepreneurs have slowed down activities in the past two years.
- A significant number of investors have dropped out of the market.
- Construction plans that were to have been advanced by the government have got stuck, if just due to difficulties relating to the forming of the present government.
In view of this, so long as no substantial change is felt in the construction momentum, we shall remain in the same situation, a situation in which there is much more demand than supply, which stimulates a clear upward trend in the price of apartments. Hence, if one seeks to invest in real estate, this is certainly the time, all the while it is possible to purchase apartments at prices considered reasonable. Moreover, there are indications that in the not-too-distant future, property will be worth much more that it is now, meaning that real estate investment will yield strong returns.
Trend on the move – price hikes
If we stop for a while and try to understand the ongoing rise in real estate prices, we will see that this is a phenomenon that has prevailed for many years, which according to all predictions, is showing no signs of discontinuing; and this as aforesaid, is because demand exceeds supply. At the same time, along with the fact that this situation has prevailed for a long time, it should be understood that COVID-19 has just widened the gap (that is, during COVID-19, less entrepreneurs and investors have been active). As a result, the gap creates a unique point in time to act for profitable investment in real estate. To enlarge? Already at this time many entrepreneurs are returning to the field of operation, so that before new apartments are added to the market, it is worthwhile to purchase apartments for investment, in order to maximize profit. This is for two reasons: first, if the purchase is done early on, one can avoid additional price rises, and second, if purchasing quickly, it will be possible to sell the apartment with certain, high profit, known in advance.
Before purchase tax goes up again
It was in 2015 that the finance minister decided to increase purchase tax to 8%. This tax is payable to the government in view of investment in real estate, as per the tax bracket, meaning, the more costly the deal, the more tax that must be paid. COVID-19, however, changed the balance of forces for the good. The desire to encourage the return to local investment, stimulated the government to decrease the tax significantly from 8% to 5%. So what tidings does this bring for the local investor? The fact is that it is impossible to know when the previous tax level will be restored, so that if a person wants to profit by investing in Israel, it is important to act quickly. To sum up, it should be pointed out that as long as purchase tax is low, and it is known that property prices are in an upward trend, and so long as demand is much higher than supply, now is the time to act, and to invest in Israeli real estate.
