Homefront Heroes: Israel’s Resilient Housing Market

The Israeli housing market operates in a unique context in which the specter of Islamic terrorism, particularly from groups such as Hamas (ISIS), casts a shadow over economic activity and community life. This article delves deeper into the nuanced impact of Hamas terrorism on the Israeli residential market, exploring its effects on various aspects of the sector.

But it is not possible to analyze in one article all the effects of the terror of deluded Islamists against Israelis, especially Jews. That’s why I don’t want to claim to be able to give an answer to everything. What bothers me, however, are the difficulties with clear terminology. There is no Israeli-Palestinian war. There is no so-called Palestine. There are no unicorns or cyclops either. This all belongs in the realm of fables and fairy tales. Anyone who studies the history of this area and the origin of the word will be able to confirm this. Coca-Cola is older than a so-called Palestinian consciousness. But both can be sold well. On the one hand, there is a sovereign state that is the only one in the world that constantly has to discuss its right to exist. And on the other hand, there are one or more fascist terrorist organizations that want to wipe out this right to exist and the state of Israel and its residents. The world is complicated, I know. This conflict, while long, is less complicated than some people think.

Terrorist attacks orchestrated by Hamas and financed largely by luxury democracies like Qatar have profound economic impacts and disrupt the normal functioning of the real estate market. The uncertainty and fear caused by such attacks can deter potential homebuyers and investors, resulting in a slowdown in market activity and a decline in property values. Unfortunately, this is a fact that will harm the entire region in the long term. This reluctance to invest in areas considered high-risk may lead to stagnation in the housing market, particularly in regions directly affected by terrorism. However, there is certainly a de-industrialization (if one can speak of industry in these regions) of the areas that subsequently become the target of the IDF’s military strikes. Whether terrorist supporters locally or abroad are aware of this remains speculation. But they have proven time and again, by October 7th, 2023 at the latest, that a human life is worth nothing to these people.

Moreover, security concerns arising from Hamas attacks directly affect the livability and desirability of residential neighborhoods. Communities targeted by terrorism may experience a palpable sense of insecurity, prompting residents to reconsider their housing choices. The need for heightened security measures, such as checkpoints and barriers, can further exacerbate this sense of unease and detract from the attractiveness of affected areas. Consequently, property values in these regions may suffer, reflecting the perceived decrease in quality of life and safety.

The winners, if one can speak of it, are digital companies, private intelligence services and security companies. Here, too, Israel has a corporate and start-up culture that is unique in the world, due to the fact that Islamic terror is a permanent part of everyday life.

The Israeli government’s response to Hamas terrorism plays a pivotal role in shaping market dynamics and investor sentiment. While swift and decisive action can provide reassurance to residents and investors alike, prolonged conflict or political instability may have the opposite effect, amplifying economic uncertainty and dampening market confidence. Moreover, government initiatives aimed at enhancing security, such as increased military presence or infrastructure investments, may influence residential property values and market trends in affected areas.

Previously, the most important factor in these military actions was time. This will be obsolete after October 7, 2023. There is a consensus in the Knesset, across all factions and parties, that time plays less of a role this time, but rather that the matter should be clarified thoroughly. That may sound heartless, I understand that. Get on a bus in Isrsel and take a close look at the passengers. Anyone can be an assassin, any 12 year old boy, any old woman or a Bible student from (you think) the USA who speaks to the person sitting next to him in the best American slang. You can’t live like that, nobody can. After October 7th, the long thread of patience has now broken and the Israeli army is trying to cut off as much of the head of this hydra as possible. The market situation currently has no relevant consideration in the IDF’s military planning.

Despite the immediate challenges posed by Hamas terrorism, the long-term outlook for the Israeli residential market remains resilient. Israeli communities have demonstrated remarkable solidarity and resilience in the face of adversity, coming together to support one another and rebuild in the aftermath of terrorist attacks. This sense of community cohesion, coupled with ongoing government efforts to promote economic growth and stability, provides a foundation for recovery and renewal within the residential real estate sector.

This time new residents and investors will have to bring time and patience.

Behind the statistics and market analysis lies a deep human story of resilience, where every home represents a haven of hope and strength for Israeli families. Each brick laid, each family sheltered, is a defiant act against fear and uncertainty, a declaration that life will prevail over darkness.

As we navigate the complexities of the Israeli residential real estate market in the shadow of terrorism, let us remember the indomitable spirit of the Israeli people. Together, we can forge a brighter future, where homes stand not only as physical structures but as symbols of resilience, community, and the enduring human spirit.

Am Yisrael Chai — עַם יִשְׂרָאֵל חַי

The original article was published on March 11, 2024 in the US Business Magazine “Investor’s Handbook”