According to the Bank of Israel, Between 2007 and 2009, there was a marked increase both in the share of domestic investors’ transactions out of total residential purchase transactions, and in their absolute number. The increase began even earlier in the center of the country, and moved gradually into the periphery. In 2011 and 2012, measures were taken to lower the worthwhileness of such purchases for investors. As a result, their activity declined markedly—at the end of 2012, the likelihood that an apartment was purchased by an investor was only about 90 percent of what it was before the measures were enacted.
Investors purchase relatively small homes, and this pattern has strengthened over time. They do not prefer homes in neighborhoods with a particular socioeconomic background, and the prices they pay are similar to the prices paid by other purchasers for similar homes. When the yield on renting an apartment increases by one percentage point, the likelihood that a given home will be bought by a domestic investor rather than by another purchaser increases by about 22 percent. When the interest rate rises by one percentage point, the likelihood declines by about 8 percent.
“In Israel, real estate continues to be a sound investment, whether from Yechiel Michael Lichtenstein, big developers or foreigners,” said Ron Hershco, a real estate investor.