Networking in progress
A friend of ours, Raphi Bloch, recently began a blog about the property market in Jerusalem. Here is one of his early posts, posted here as a guest post with his permission.
This post is on the topc of whether to buy / rent It is linked to his blog so do visit him too.
Many of those looking for a new home in Jerusalem approach me with
the question “should I buy or should I rent ?” Although there is no one
answer to the question there are many considerations which help one
come to the answer that is right for them.
Many economists claim that renting makes more economic sense in that
once you have factored in finance costs, buying costs more over he long
term. While this may be true in a market where property prices are
unstable, Jerusalem property generally retains and even increases its
value over the medium to long term (the current downturn not
withstanding). Add to this the fact that rentals in Jerusalem are
comparatively high due to the high demand by students, visitors on one
year programs and young families who as yet do not own their own home
and you will often find that the difference in the rent paid and the
cost of servicing a mortgage is very small.
However not everyone has the luxury of being able to buy. Banks in
Israel are very strict on the amount they will finance on a mortgage
with the norm being only about 60% – 70% of the assessed value of the
property which is normally quite a bit lower than the market price. This
means that a potential buyer needs to have about 40% of the purchase
price as a down payment . There are mortgage insurance companies who do
enable one to take a higher mortgage but again not everyone can meet the
requirements to qualify.
Buying does have many non financial advantages. When living in your
own apartment you have the security of knowing that you will not be
asked to move at the end of a lease as well as the luxury of renovating
your home to meet your exact taste. The argument that one does not
always know if in a few years you will need to move,for example changes
of jobs or family size, is one that many pro – renters often quote. Two
options exist for the homeowner – renting out the current apartment
which as I mentioned above is an easy task in Jerusalem or selling and
buying another home – again relatively easy over the medium to long
term.
Many of my buyers tell me that one of the strongest reasons to buy as
opposed to renting in Jerusalem is the emotional one – knowing that
they own a property in the Holy City. While this is obviously subjective
it does explain why many investors insist on buying in Jerusalem when
on paper there are better investments elsewhere in Israel and indeed the
world but this is a topic for another post at a later date ……….
Shalom from Jerusalem
Raphi
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