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I don't think it's that simple. I live in Vancouver, I'm pretty familiar with Tel-Aviv, and I visited Sydney ;) Tel-Aviv is expensive because it's the place p

by YZF 3y ago

I don't think it's that simple. I live in Vancouver, I'm pretty familiar with Tel-Aviv, and I visited Sydney ;) Tel-Aviv is expensive because it's the place people want to be. As you say, it's cheaper outside of Tel-Aviv and there's a reason for that. Vancouver is like that as well, there are more amenities, more jobs, a better "life style" so to speak, in Vancouver. And people are willing to pay for that. And part of why it's like that is because of the density and the people that live there. So sure, in theory you could build another city like Vancouver on the Sunshine Coast, or on Vancouver Island, but in practice you can not - it's the results of decades of evolution. In Israel lessay Hadera or Netanya could be Tel-Aviv... But they're not. And so you pay less to live there. There's plenty of "land" in Australia but most of it is a) desert you don't want to live in, b) too far from anything. The Sydney metropolitan area is very large. Not unlike Gush Dan or Greater Vancouver. And in that area there isn't "more land" so all the other land, like all the other land in Canada, doesn't matter. Israel being a speck compared to those does actually have a shortage of land since you aren't going to turn the entire country into a city (one would hope). That said it's true there's been a bubble, mostly related to interest rates. But as they say the market can remain irrational longer than you can remain solvent. Even if prices correct in Israel or in Canada or in Australia the highly desirable areas are likely to still remain relatively, and absolutely, expensive. Things that can change that are reduced demand, economic downturn, those areas becoming less desirable, etc. People keep talking about lack of affordability, but the reality is there are (a lot of!) people that can afford to live in those places, the 1%. The 99% can't afford but those aren't the ones buying those properties. All these cities have a population that's significantly more affluent than lessay 40 years ago. In Vancouver and Tel-Aviv e.g. a lot of tech workers.

invalidname 3y ago
So I lived for years in a private property in the center of Tel Aviv. 2 min walking distance from Disengof center. While there are a few high rises in the area there's still a lot of low rises and old buildings. There are still single story houses right in the center. (Edit: my point here is that there's a lot of space and people don't build enough). The problems are multiple. You are correct, I over simplified and interest is a huge reason for this bubble. 1. The local government doesn't allow construction in the areas people want. They're afraid that the influx of people will reduce the quality of life since the school system, sewage, policing etc. needs to be updated. They also lose on residence financially. Businesses fund cities and municipalities go bankrupt if they allow too much construction. 2. Traffic to Tel Aviv is terrible which makes even the outskirts less attractive. There's no parking either and if you choose to use public transport then it's closed in the weekends. I hope the light rail will change this but I think it's too little, too late. I'd keep a close eye on the prices in Bat Yam and Jaffa. If they go up there it might be due to the rail. 3. The government is the biggest landowner in these parts, it sells lands using a process that values return rather than the price to the consumer. 4. The rent market isn't regulated at all. That means investors push up prices and then overcharge on rent. Rental properties have a lower tax bracket than stock market investments. My accountant has 10 apartments for rent and this isn't an exceptional scenario. People are hoarding properties.
- YZF 3y ago
  Rental properties and landlords is part of how the market works. That can be a good thing. In Vancouver (so they say) people own condos and don't rent them out, they just sit empty. In North America people lose it when you talk about government interfering with market prices but Vancouver (or rather British Columbia) has limits on how much you can raise rent for existing tenants every year, but there's plenty of loopholes. All in all the rental returns are not great. A $2M house might rent for (guessing) $5-7K a month, that's a bit more than 3% return, before expenses. Prices have been crazy for the last two decades. They're not showing any signs of a major reversal. I remember talking with some real estate guy about how expensive Vancouver is- 15 years ago. There is so much more demand now despite prices being x3-5.

by YZF 3y ago

invalidname 3y ago

So I lived for years in a private property in the center of Tel Aviv. 2 min walking distance from Disengof center. While there are a few high rises in the area there's still a lot of low rises and old buildings. There are still single story houses right in the center. (Edit: my point here is that there's a lot of space and people don't build enough). The problems are multiple. You are correct, I over simplified and interest is a huge reason for this bubble. 1. The local government doesn't allow construction in the areas people want. They're afraid that the influx of people will reduce the quality of life since the school system, sewage, policing etc. needs to be updated. They also lose on residence financially. Businesses fund cities and municipalities go bankrupt if they allow too much construction. 2. Traffic to Tel Aviv is terrible which makes even the outskirts less attractive. There's no parking either and if you choose to use public transport then it's closed in the weekends. I hope the light rail will change this but I think it's too little, too late. I'd keep a close eye on the prices in Bat Yam and Jaffa. If they go up there it might be due to the rail. 3. The government is the biggest landowner in these parts, it sells lands using a process that values return rather than the price to the consumer. 4. The rent market isn't regulated at all. That means investors push up prices and then overcharge on rent. Rental properties have a lower tax bracket than stock market investments. My accountant has 10 apartments for rent and this isn't an exceptional scenario. People are hoarding properties.

YZF 3y ago
Rental properties and landlords is part of how the market works. That can be a good thing. In Vancouver (so they say) people own condos and don't rent them out, they just sit empty. In North America people lose it when you talk about government interfering with market prices but Vancouver (or rather British Columbia) has limits on how much you can raise rent for existing tenants every year, but there's plenty of loopholes. All in all the rental returns are not great. A $2M house might rent for (guessing) $5-7K a month, that's a bit more than 3% return, before expenses. Prices have been crazy for the last two decades. They're not showing any signs of a major reversal. I remember talking with some real estate guy about how expensive Vancouver is- 15 years ago. There is so much more demand now despite prices being x3-5.