The economic analysis of the market, prepared by the Institute of "Geo cartography", for the annual conference of the Forum for Israel Development, Construction and Real Estate 2007 shows that Binyamina real estate had risen fivefold by comparison to Tel Aviv. The price on apartments in Tel Aviv had risen only by 4.5%, while in Haifa the slump in prices continues. The study was made for this week's annual conference of the Forum for Development, Construction and Real Estate 2007 attended by the Minister of Housing Mr. Zeev Boym and the economic high echelons.

The economic analysis of the market, prepared by the Institute of "Geo - cartography", showed that, during the last two years, the price of housing in Binyamina and the surrounding area had increased fivefold by comparison to Tel - Aviv. The research was conducted by Dr. Rina Dgani, the CEO of the Institute of "Geo-cartography",specializing in the estimation of economic potential, for the annual conference of the Israel Forum for Development, Construction and Real Estate, that took place this week and was attended by Israel Minister of Housing Mr. Zeev Boym and the economic high echelons.

During the last years the price of apartments had risen dramatically, and not only in Binyamina. Jerusalem and the surrounding area - Maale Edomim, Mevaseret Zion and Giva'at Zeev also enjoyed the sharp increase in prices that took place in Israel; an average Jerusalem apartment had gained 20% in price during the last two years, while in the surrounding area the prices rose by about 15%. In most communities this significant increase in price is explained by the limited supply of low cost apartments under construction, on the one hand, and high demand by outsiders - on the other.

Binyamina, Shoham and Beer Ya'akov also enjoyed a significant rise in prices that ranges between 20 to 23%. Binyamina leads the group with the 23% increase in prices. According to "Geo - cartography", Zichron Ya'akov enjoyed only a moderate 7% increase, which might be partly due to the sharp increase in prices the town enjoyed in 2004 - 2005 or due to prices in the "Dreams of Zichron" project that lowered the average prices of private homes. Ashdod and Modi'in - that enjoyed construction boom during the last years, along with the influx of new residents (which settled in Ashdod) - saw prices boosted by about 16%. In Modi'in and Shoham the prices are rising because both of these developing communities had gained high national recognition; at the outset their real estate was priced relatively low while now it is beginning to attain its real market value. Their main advantage is location, since they are strategically place halfway between Tel - Aviv and Jerusalem.

Ra'anana and Afula also lead in sharp price increases; in both of these very different cities the prices of real estate rose by about 13%. Dr. Rina Dgani, ascribes the rise in prices mainly to the shortage of land for construction and the social status of the communities. In Afula, the prices might have risen due to northern communities, located closer to the boarder, being less attractive - thus raising the demand for a more southern city of Afula, which is still relatively close to the north.

Netania and the surrounding area - Kadima, Tel Mond and Tzoran are enjoying moderate increases in prices, in the range of 5% to 7%; while the large communities of Even Yehuda and Kefar Yona saw the prices of their real estate rising by about 10%. Dr. Rina Dgani, explains the rise in prices, in the aforesaid communities, by the construction boom in Netania, significant increase in employment opportunities within the communities, easy access to the coastal highway (Kevish Ha - hof) and increased transit traffic generated by the peripheral closeness to the metropolis as well as high real estate prices in communities located closer to the center.

The increase of real estate prices in moshavim (cooperative settlements) is due to their offering a countryside quality of life and a large number of private homes on private land. In the established communities of Gush Dan, Ramat Gan, Givataim, Qiryat Ono, Ramat Hasharon and Rehovot the prices rose by about 5% only, since these are older settlements with already expensive homes that are less attractive to the general population.

Despite all the media coverage it gets, and in considerable contrast to Jerusalem, Tel Aviv's real estate rose by only 4.5%. However, the price rising in Tel - Aviv began in early 2004 and as a result the changes of the last two years weren't, on average, all that high if compared to the two preceding years; nevertheless this doesn't contradict the fact that a lot of luxury apartments are currently being built in the city, most of which have price tags of over half a million dollars. Minimal rise in prices, 2 - 3%, was also experiences by other Gush Dan communities, such as - Rosh Ha'ayin, Herzliah, Givat Shmuel, Rishon Le - Zion and Petah - Tikva.

The abovementioned review also examined the slump in the prices of apartments; the most significant lowering of prices was experienced in the North of the country. Apartments in Acre and Nahariya had lost more then 20% of their average price. The price slump in the North, Haifa and Krayot can be explained by the war in Lebanon, which still affects the demand, as well as the continuous strengthening of the center relative to the periphery. By comparison to the North, central Israel becomes ever more attractive due to employment opportunities it offers.

Lod and Tirat Hacarmel lost about 8%, Hadera and Or Akiva - 5% to 6%; in Haifa, one of the three largest cities in Israel, real estate went down by the same percentage.

In Beer Sheba, Or Yehuda, Hod Hasharon, Gedera, Krayot and Nesher the prices went down, on average, by 2% to 4%.

In Dr. Dgani's opinion, the lowering of real estate prices had reached the bottom in communities experiencing construction boom, such as - Hod Hasharon and Gedera; due to some increases experienced during the last two years new prices are currently adjusted to demand and might go down only a fraction, and that relative to entrepreneurs' expectations.

The lowering of prices in Or Yehuda might well be due to the demand the town experiences, as well as to the change expected in the type of population settling there.

In the last two years, the most significant price slump of all was experienced in Ariel; there the real estate lost more then 50% of its value, which is mainly due to political uncertainty regarding this city's future.

A version of this article by Yoav Etiel appeared in Magazine Hamoshavot

Yoav Etiel is a Partner at BarEl Properties Group

(C) 2007 Copyright BarEl Properties Group, Ltd.