The eternal debate about the viability of investing in the capital market versus investing in the real estate market arises every year and robs investors of their peace of mind as they try to examine which would be a better choice:
- Should they choose a solid investment or take a high-risk investment?
- Where should they put the money?
- What will yield them greater profit?
Although there is no definitive answer to these questions, as this is an incredibly complex issue that depends on variable factors such as the amount of investment, the market situation, social and political trends, nevertheless, according to all predictions, it appears that the year 2019, which has just begun, is going to be a good year for the real estate market and real estate investors in Israel.
The election year will have a positive impact on the real estate market
The year 2018 was characterized by stagnation in the Israeli real estate market, with apartment prices barely changing. It was a year in which investors distanced themselves from the market due to the increase in the purchase tax for buyers of a second or more apartment, as well as the progress of the price per inhabitant plan led by the Ministry of Finance in recent years. But now, it appears that 2019 will put an end to the stagnation in the real estate market.
2019 is an election year, a new government is about to convene and the entry of new blood will also affect various programs such as the price for the tenant. A new finance minister and changes in the Ministry of Finance in general will likely lead to a delay in the price for the tenant program. If so far the price for the tenant programs led to many buyers being forced to stay on the fence, now demand will increase.
But since much of the land allocated to the Lemishtakon program was taken from the free market housing stock, the supply will also decrease, which will ultimately cause housing prices to rise. Hence, if you invested in real estate ahead of time, the profit will be entirely yours.
Not all that glitters is gold.
And while 2019 is shaping up to be a good year for real estate, many investors are still drawn to more glamorous investment avenues such as the world of innovation and technology, an area that has long become the talk of the town among many investors, whether due to the large sums of money in these worlds or the hunger for innovation in all corners of the world.
But it should be remembered that not all that glitters is gold - investing in innovation and technology and purchasing shares in the capital market of technology companies is an investment that is considered a high-risk investment compared to investing in real estate. At the end of the day, 95% of Israeli startups close, and so do the large companies in the market that are based on innovation, not maintaining their stability.
Think of hot trends like Bitcoin and digital currencies that until recently were considered the next hot thing in the investment world, but ultimately suffered a dramatic decline during 2018 that led to many investors losing their money.
Real estate – a solid and profitable investment
Investing in the real estate market is considered an even more solid investment given the high volatility that characterized the capital market in 2018, not only in the worlds of technology and innovation, but in almost all investment avenues. Sharp rises and falls resulted in negative returns and led to heavy losses. If this trend continues this year, money invested in the capital market will be at significantly higher risk than investing in real estate.
And while high-risk investing sounds more exciting, certainly in the fields of futuristic innovation that inspire admiration, high risk is not for all of us. Those looking for a solid and stable investment will put their money in the real estate market, a market that remains stable overall compared to the volatile capital market. Even when certain events occur that lead to a change in the trend of demand and supply, the population continues to grow naturally at a rate of 3% each year, and hence the demand for real estate will also continue to rise.
In light of the trends in the real estate market over the past year and the political and diplomatic moves that are about to take place in 2019, along with the high volatility in the capital market - it seems that more than ever, you should put your money in real estate this year.
