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

Fair Rent

Yair Assaf-Shapira

Jerusalem Institute for Israel Studies

On November 24, the memorandum of the law for fair rent was published. The law states that the rent paid for an apartment will not increase by more than 2% per year, for three years. How different is the proposed situation from the prevailing one?

The average monthly rent paid for a 3.5 to 4 room apartment in Jerusalem stood at NIS 4,480 in the second quarter of 2014. This amount was much lower than the average paid in Tel Aviv (NIS 6,420), and much higher than the average paid in Haifa (NIS 3,010). The rent for these apartments in Jerusalem saw an average rise of 5.5% in the last year (since the second quarter of 2013 – during a period of four quarters), similar to Haifa (5.5%) and Tel Aviv (5.4%).

Compared to the proposed maximum stated in the law (2% annually), the rise seems to be steep. Compared to the cost of living, measured in the consumer price index, it is even more extreme, since the index rose only by 1% during the period. That means that the average rent rose by more than twice the proposed maximum, and more than five times the rise in the other components of the consumer price index.

Rent prices of smaller apartments in Jerusalem rose by lower percentages (1.3% rise and 4.3% rise in 1.5-2 room and 2.5-3 room apartments, respectively). Rent for larger apartments, sized 4.5-5 rooms, rose more dramatically, by 6.1%.

Will the proposed law change the balance between real estate rent and sell markets? Average purchasing prices for 4 room apartments in Jerusalem stood in the second quarter of 2014 at NIS 1,925,000. These prices rose during the previous year (from the second quarter of 2013) by 9.5% - a very steep rise. Will the prices' change rates be affected by the new law? Only time will tell.

Data sources: Ministry of Construction and Housing – Division of Economic Analysis: Data Tables

www.gov.il – Israel Government Portal

What do you want to be when you grow up?

Yair Assaf-Shapira

During the 2011-2012 academic year, a total of 37,670 students were enrolled in Jerusalem’s academic institutions, constituting 15% of the total number of students in Israel. Among Jerusalem’s students, 20,580 were enrolled at the Hebrew University, 11,410 were enrolled in academic colleges, and 5,680 were enrolled in colleges of education. 

The students’ fields of study varied widely. At the Hebrew University the most popular fields of study were the social sciences (27% of students), humanities (22%), and natural sciences and mathematics (20%). Recently published data from a long-term study by the Central Bureau of Statistics explores the following question, among others: What will students in the various fields do after graduation?

The study surveyed students who had completed their studies in the 2005-06 academic year, using two points in time: 2008 and 2011. An examination of areas of employment (economic sectors) among graduates reveals that two years after graduation, a high percentage of law school graduates (62%) are employed in the business service sector, as are natural sciences and mathematics graduates and engineering and architecture graduates. A high percentage of medical school graduates (72%) are, unsurprisingly, employed in the healthcare, welfare, and nursing services, whereas social sciences and humanities graduates are distributed across several economic sectors. Among humanities graduates the main sectors are education (28% of graduates) and business services (24%). For social sciences graduates the main sectors are business services (29%), and banking, insurance, and finance (18%).

As the years passed, changes in the employment sectors of graduates were observed, and the methodology of the study enables us to examine them. Among 2005-06 humanities and social sciences graduates, the percentage employed in the healthcare, welfare, and nursing sector increased (by 4.4 and 4.7 percentage points, respectively) between 2008 and 2011. Among natural sciences and mathematics graduates as well as engineering and architecture graduates, the percentage employed in the business service sector increased (by 4.2 and 4.8 PPs, respectively) – this already being the main employment sector among these graduates. 

Regarding continuing education, 38% of bachelor’s degree recipients went on to pursue a master’s degree, and evidently the field with the highest degree of continuing students is the natural sciences and agriculture (47% of bachelor’s degree recipients continued to study for a master’s degree). The most popular field for the pursuit of a master’s degree was business and management, with 14% of graduates (about 36% of students who went on to pursue a master’s degree) selecting this field.

Translation: Merav Datan

Sources of data: 

Statistical Yearbook of Jerusalem 

Continuing Studies and Employment Five Years after Receiving a Bachelor’s Degree, Central Bureau of Statistics, November 2014

Faith in the Future

Yoad Shahar

Jerusalem Institute for Israel Studies

www.jiis.org

Jerusalem is considered one of Israel’s poorest cities. In 2011 the average gross monthly salary for employed individuals in Jerusalem was 8,014 NIS, compared with 10,409 NIS in Haifa, 11,445 NIS in Tel Aviv – Jaffa, and 9,461 NIS in Israel as a whole. Moreover, in the same year 44% of salaried employees in Jerusalem earned less than the minimum wage, compared with 38% of salaried employees in Haifa, 33% of salaried employees in Tel Aviv, and 38% in Israel.

In addition to these objective statistics, in the past summer the media published data from the annual social survey of the Central Bureau of Statistics. This survey provides another dimension that aids in understanding the standard of living and welfare in Israel – namely, the subjective dimension. The data painted a dismal picture of the manner in with Israel’s residents perceive their individual economic situation, and an even more dismal picture when respondents were asked about their expectations of the future in this regard. 

A total of 19% of survey respondents said they expect their individual economic situation to deteriorate in the future, 38% believed it would not improve, and 43% believed that their individual economic situation would improve in the future. One might expect that because Jerusalem is a poorer city in terms of objective indices, its residents would expect a bleaker future, as there would be fewer possibilities for financial savings and future planning. However, only 17% of Jerusalem’s residents believed that their individual economic situation would deteriorate in the future and 34% believed it would not change, whereas 49% believed their situation would improve – higher than the figure for Israel and the other major cities. In Tel Aviv and in Haifa only 40% and 42%, respectively, believed their situation would improve.

One of the factors that might explain this optimistic view of the future is the power of faith. The social survey also questioned respondents about the degree of their religiosity (ultra-orthodox, religious, traditional-religious, traditional and not very religious, and secular / not religious). A breakdown by outlook on one’s economic situation (among Jews) reveals that a greater degree of religiosity corresponds with a higher degree of optimism regarding one’s future economic situation. (A comparable trend was observed among non-Jews as well.)

Even though the economic situation of the ultra-orthodox in Jerusalem ranks among the lowest in the city in terms of objective indices, 59% of the ultra-orthodox stated that they expect their economic situation to improve in the future, compared with 46% of religious respondent, 43% of secular respondents, 35% of traditional and not very religious respondents, and only 31% of traditional-religious respondents. The effect of subjective expectations on the objective situation has not yet been demonstrated. If such an effect does exist, then believers have a brighter economic future.

Data source: The social survey, by the Central Bureau of Statistics

Translation: Merav Datan