The north and south of the country are experiencing something of a boom-time in real estate right now, but when the housing market retracts, as it may be doing now, history shows the periphery will be the first to feel the pinch.
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Silvan Shalom, the minister for the development of the Negev and Galilee, thinks the slowdown might actually bring more people from the city to the country.
"The significance of the slowdown is a drop in housing prices, which could make it easier to move to the periphery," Shalom said. "Beyond that, real estate prices are basically lower in the periphery, so some people having difficulty finding accommodations in the central area will naturally choose to relocate to the Negev or Galilee."
According to Ministry for the Development of the Negev and Galilee figures, 58% of the thousands of dwellings waiting to be sold in the Galilee are in cities, 9% are in small to medium-sized towns, and 33% are under the jurisdiction of rural regional councils. The Negev also has thousands of homes for sale, 81% concentrated in cities and 19% in regional councils.
From the north come housing starts
Most Galilee cities have a large supply of available second-hand units but, with little construction going on, hardly any new housing to offer. One prominent example is Tiberias, where the real estate market has been booming after years of stagnation. It was recently singled out in a Finance Ministry report as the only city not experiencing a slowdown.
Tiberias has 1,000 apartments listed for sale, an astounding figure for a city of only 42,000.
"For years Tiberias didn't have any building projects and nothing new was built there for at least seven or eight years," said Avishay Malka, a real estate and tax attorney with an office at neighboring Kibbutz Alumot. "But in the last year or two we've seen quite a few housing starts."
In more desirable sections of the city like the Mordot Tveriya neighborhood on the city's slopes, the price for a four-room apartment has shot up from around NIS 480,000 two years ago to NIS 750,000 today. A house in Ramat Tveriya, which a year and a half ago would have been priced at NIS 1.4 million, now costs NIS 1.8 million.
Another northern city experiencing a boom in real estate activity lately is Acre, where 1,500 housing units are currently at some stage of development, with 330 now on the market.
A new four-room apartment goes for NIS 850,000. Most of the construction is at the city's eastern and northern edges, considered to be the better areas of the city. But with all this construction the industry-wide slowdown comes at a critically bad time.
"The protests severely hurt the market, and in August and September buyers completely disappeared," said Eyal Ginat, the Western Galilee franchisee for the Anglo-Saxon real estate brokerage network. "The field has changed unequivocally to a buyers' market, but sellers still haven't internalized this."
Another reason for worry in Acre is that housing prices climbed dramatically the past few years, even tripling in some areas, but people are afraid prices might fall just as fast. Asked if prices might come down considerably in the coming months and create attractive bargains, Ginat replied skeptically: "The problem is that the builders already bought the land from the state at top prices, and they can't fool around too much on prices if they want to maintain their profit margins."
The Galilee's rural communities, however, haven't been affected much by the slowdown and keep thriving. Prices for lots in kibbutz and moshav expansions and in communal settlements are still climbing, especially in the northern coastal plain and around the Sea of Galilee. In the villages of Poriya Illit and Kinneret, near the lake's southwestern shore, a 600-square-meter plot of land cost about NIS 500,000 two years ago. This has gone up to about NIS 800,000 now and may soon reach NIS 1.2 million.
Even less attractive areas like the Jordan Valley south the Kinneret don't come any cheaper: In the expansion zone of Kibbutz Ashdot Yaakov Meuhad, 500-square-meter lots are priced at no less than NIS 980,000. The director of the Jordan Valley Regional Council's information center for employment and absorption, Ilum Avigdori, explains that the quality of life and education offered here are exceptional, as are the values for raising children.
"Instead of taking them to malls they can be taken out into the fields and nature," he explains, adding that improvements to the transportation network have brought Haifa's workplaces to within a 45-minute commute.
Up until July, real estate in the Negev had thrilled to a several-year boom, both in Be'er Sheva, the center of most of the activity, and in outlying towns like Dimona and Netivot. Be'er Sheva now has 2,700 housing units for sale but it has also been caught by the slowdown. Builders who already won tenders prefer sitting tight until the effects of the summer's social protest become clearer before they launch any new projects.
A new four-room apartment in Be'er Sheva costs between NIS 800,000 and NIS 1 million, depending on location and building standards. A semi-detached house in the exclusive Ne'ot Lon neighborhood, which cost NIS 750,000 four years ago, is now valued at about NIS 1.3 million. Attorney Amnon Cohen, CEO of the Be'er Sheva and Negev regional branch of the Association of Contractors and Builders in Israel, says many buyers aren't originally from the area.
"Students finishing their degrees often prefer settling in the city - especially in light of prices in the central region," he says. "Here they have theater, entertainment venues, museums, and the opportunity to buy an apartment for much less than in the center of the country, not to mention that the train takes just over an hour. There is lots of land that the builders aren't snapping up for now as they wait to see which way the wind blows."
People buying new homes in the country's periphery are entitled to government benefits worth up to NIS 100,000. Buyers in Be'er Sheva, however, have been excluded from this plan. Minister Silvan Shalom said he voted in the government against excluding Be'er Sheva from the benefit.
"The treasury obviously opposed granting the benefit to couples moving to Be'er Sheva because it would cost too much," he claimed. "Another argument was that the benefit couldn't be given to people relocating to Be'er Sheva because then nobody would go to Ofakim, Yeruham or Dimona."
For the first time in years, apartment buildings are being built in Dimona. Two low-cost housing projects are now being marketed and a third is expected to be launched in the next few weeks. The price of a four-room unit in one of the new projects - NIS 640,000 after factoring in grants and benefits - is still significantly higher than the NIS 550,000 price tag for a similar second-hand apartment in the city's Tashluz neighborhood, according to Lior Balul, owner of the local Remax Nova realty franchise.
New single-family houses are also being sold in Dimona, in two projects in its northern Har Nof neighborhood. The price for a five-room 140-square-meter semi-detached home on a 280-square-meter plot runs at about NIS 1.3 million.
Long known for its distinguished kabbalists, Netivot has had a steady influx of new residents the past few years, with population growing at an annual 4% to 5% clip. The "Netivot West" building program includes plans for 1,700 new housing units.
A new four-room apartment in the city costs between NIS 720,000 and NIS 750,000 - about the same as a second-hand apartment in one of the better neighborhoods.
"Netivot's standard of living is approaching that of the central cities," said Kfir Asulin, proprietor of the local Remax branch. "All the chains in Be'er Sheva and Ashkelon can be found here."
Asulin added that the town's nightlife and clubs draw partygoers from Be'er Sheva and the entire southern region. The opening of a train station is planned for 2014.
Jobs in the sticks
A fundamental question asked by potential homebuyers is where they can find a job in the Negev or Galilee. The Ministry for the Development of the Negev and Galilee is putting emphasis on expanding the job supply in these regions.
"Anyone deciding to move can be certain he has a place to work," claims Minister Silvan Shalom. The organizers of a fair promoting the settlement of the Negev and Galilee held last Tuesday at the Tel Aviv Port said there are over 2,000 job openings to be filled in fields such as education, social work, high-tech, design, marketing, customer service and tourism. Major employers include Amdocs, Iscar, ECI Telecom, Teva Tech, Tel-Hai Academic College, Emek Yezreel College and Golan Plastic Products.
Will all this help bring people from the center to the country's far-flung periphery? In recent years some migration has taken place, mostly due to rising housing costs. But much improvement is still needed in infrastructure and intercity transportation, as well as developing outlying localities, in order to draw more people to the Negev and Galilee.