Tel Aviv has dropped out of the top 20 of most expensive world cities, according to Business Insider. After 2011, the rankings for the most expensive cities in the world were in and Tel Aviv was 19. Their estimates are based on those living in the city, not travelers coming in. Oslo ranked 1 on most lists, a few others named Tokyo. In 2012 it was Moscow.
Not that it has become much cheaper to live in Tel Aviv, but factors influencing the ranking could have pushed other cities ahead. Tel Aviv is still more expensive than Manhattan which is the highest US city ranked at #43 in the world.
Cost of living is based on several factors, affordability of housing in relationship to average incomes, cost of basic food items, a fast-food meal, costs of daily goods, services and public transportation.
In relationship to the cost of housing, statements coming out of business and government leaders and real estate professionals in Tel Aviv are at odds as to whether there is a bubble or not. At a recent Dun-Bradstreet forum all the economic experts except one, stated there was a bubble, that prices in Tel Aviv are 20% above the affordability index.
According to the Israeli business magazine ‘Globes’, Real Estate Appraisers Association in Israel chairman Ohad Danus. “Prices have risen because of building costs, VAT; developers’ profits are falling, and most of the rise is because of land, which is almost entirely sold by the government, which is the main beneficiary of the rising prices. Israel has failed in the past few years in creating supply in high demand areas which could stem the rise in prices.”
Outside investors, such as a British couple I helped purchase housing here, saw large Israeli cities as an investment they could afford, and simply chose to continue renting and working in London, the price of purchase being out of their reach there.
Tel Aviv still remains highly attractive, with its beaches, urban sophistication and ease of transport and atmosphere of freedom and social life. Young couples are choosing to buy outside and commute, or purchase an investment outside of Tel Aviv and rent in the city.