How Much Do Jerusalem Residents Pay to Live near the City Center?

Ruth Abraham

In late November the Central Bureau of Statistics published data about the completion and commencement of construction during the first nine months of 2014. The data reveal that the number of housing units completed in Jerusalem is the largest in Israel, constituting 6% of all completed construction in the country. Likewise, Jerusalem is also in first place in terms of housing units begun, constituting 9% of new construction. It is important to note that the population of Jerusalem comprises about 10% of the overall population of Israel.

The “Madlan” index of housing prices provides an indication of typical prices at which apartments are sold. The index is based on business transactions listed in the real estate database of the Tax Authority after being optimized and sorted. The index reveals that housing prices in Jerusalem (for the months examined – April to September 2014) are among the most expensive in Israel. The price per square meter in Jerusalem is 40% higher than in Haifa, 57% higher than in Be’er Sheva, and about 20% higher than in Rishon LeZion. However, it is lower by 45% than the price in Tel Aviv.

The selection of a place of residence and the purchase of an apartment often depend very much on the distance from the city’s main business center. Some prefer a place far from the center in order to benefit from the option of a larger home with a garden or a view, whereas others insist on an urban lifestyle and prefer to be near the center. These decisions have a bearing on key aspects of our lives, such as transportation, service consumption, trade, and the like.

Evidently, in Jerusalem there is a positive correlation between proximity to the city center and housing prices. The closer one is to the center, the higher the housing prices per the index. This trend indicates that the average home buyer in Jerusalem is prepared to part with 35,331 shekels in order to be one kilometer closer to the city center. Accordingly, we see that in neighborhoods associated with a high socio-economic status – such as Mishkenot HaLeum, Rehavia, Talbieh, Nayot, Beit HaKerem, and Old Katamon – the prices are higher than in neighborhoods of a comparable socio-economic status that are located farther away from the city center – such as Ramat Sharet, Talpiot, Arnona, and Holyland.

Jerusalem neighborhoods may be divided into ultra-orthodox and secular neighborhoods. The price trend which characterizes ultra-orthodox neighborhoods is the opposite of the one described above. As the distance from the center increases, the housing prices in these neighborhoods rise. This trend is in part due to the larger apartments in the outer neighborhoods.

Sources of data:

Madlan website: www.madlan.co.il

Construction in Israel, Central Bureau of Statistics