Friday, February 25, 2005

Rising prices

I've always had mixed feelings when it comes to foreigners buying real estate in Jerusalem and now that I'm a home owner, articles such as this one in the new English language Yediot Achronot make things harder still.

Jerusalem properties have always been popular and prices weathered the intifada and economic downturn fairly well. In the last year or so however, the local real estate market has really taken off and, having purchased a property at the right time and with a deposit in strong British pounds, I'm really patting myself on the back. That the property is in one of the neighbourhoods mentioned not only in the above, but in every other article written on the subject is an additional reason to be pleased with myself and this side of me only hopes that the trend towards inflated prices continues.

But then comes the down side; wherever gentrification of a neighbourhood occurs, an impact is felt by the traditional inhabitants who find themselves living in properties which they couldn't afford to buy were they on the market now. This is particularly felt when the next generation begins the search for a property close to their parents only to find themselves priced out of the marketplace. Bak'a, the area in which I live, is a prime example; taken over when the Arab population fled in 1948, it was originally used to house the oriental Jews who were absorbed in the early years of the State and the area became a "Shkunat Oni" - an impoverished neighbourhood. Latterly however, its character Arab houses, quaint corners and little streets have become exceedingly desirable and the nature of the area has changed from poor to fashionable. Whilst those who arrived in '48 with nothing have profitted financially they now find themselves living in an area where they can't afford to shop.

David's Village is an oft-quoted example of a failed housing project - not from an economic point of view although sales slowed significantly during the intifada, nor in terms of aesthetics, the attractive buildings and walkways providing a pleasant link between the hotel area and the Old City, but due to the lack of life that has been the inevitable result of building properties that the local market can't afford. The majority of these properties are occupied for maybe a couple of months a year and are otherwise quiet and dark. Unfortunately the lesson has not been learned and several other new Jerusalem developments are currently aiming for a similar buyer.

Sitting around the Shabbat table as a newlywed, the conversation inevitably turns to house prices but Jerusalem scarcely gets a mention; instead the various projects in Buchman, Kaiser and Givat Ha "C", all neighbourhoods in the new city of Modi'in feature prominently. Jerusalem's young middle class professionals are leaving in droves, attracted by new, relatively affordable housing. Modi'in's proximity and ease of access to Tel Aviv and other major centres of employment is an additional bonus whilst Jerusalemites are still waiting for a fast train link.

Whilst I'm undoubtedly on a winner financially, I can't help but feel that with so many friends moving away I'm losing out socially. My kids won't be able to socialise with the next door neighbours if they live in New York or Los Angeles. Whilst Bak'a won't ever turn into a ghost town, the character of the neighbourhood which caused me to move here will change. Ironically I could be considered to be a part of the problem.

I'm in favour of anything that is good for the Israeli economy and, whilst it's clear that a person who spends $500,000 on property here is putting money in, it's important to recognise the negatives too. Driving property prices out of the range of the average Israeli pocket, even if only in limited, desirable areas is damaging to the fabric of society and has the potential to cause friction between the traditional and new populations. Just one more battle for our society to deal with.

Shabbat Shalom

Gilly

1 comment:

Jack's Shack said...

FWIW this is a problem here in Los Angeles too. We purchased our home in September of 2001.

It has almost doubled in value as have many of the other homes in the neighbohood and various areas we would like to live in.

If I had to try and purchase a home now it would be very difficult, even in the "older" neighborhoods for the very reasons you mentioned.