One end is a Jewish settlement across the Green Line, the other is close to Israel's haunting memorial to the victims of the Holocaust, Yad Vashem. In between, Jerusalem's light railway travels through Palestinian districts, skirts ultra-orthodox enclaves, grazes the ancient walls of the Old City, turns along historic Jaffa Street, passes the chaotic and colourful shuk, or market, crosses the stunning Bridge of Strings at the city's entrance and heads up to Mount Herzl, where Israel's fallen soldiers are laid to rest. It is an emblematic, as well as a literal, journey through the city.

Inside its sleek carriages is a microcosm of Jerusalem's complex population: every degree of Jewishness from bare-headed secular to black-hatted ultra-orthodox, Palestinians, khaki-clad soldiers, recent Russian immigrants, tourists and pilgrims. It seems appropriate, following last week's announcement of a general election in January, to take the political pulse of the city along the artery of the light railway.

"Bibi's going to win," shrugs Ran Huri, using incumbent prime minister Binyamin Netanyahu's nickname. "He's charismatic and he has the courage to say what he means. And most people in Israel are rightists." The 26-year-old, who is waiting for a train in the settlement of Pisgat Ze'ev, plans to vote for the small pro-settler Jewish Home party – but, like others, he views Netanyahu's victory as inevitable. "There's no one better than him," says Shmuel Moshe, minding his pitzutzia – a small shop selling cigarettes, spirits and lottery cards – near the light railway's tracks. "There's no one who can beat him. Anyone else will destroy the country."

"Bibi's on 33% and Shelly Yacimovich [his nearest rival] is on 20%. It's difficult to believe that gap will change," says Mishael Kinkulkin, a 20-year-old soldier drinking coffee in the shuk with his assault rifle across his lap. "I'll vote Labour because I believe in helping the weakest part of society, but at the end of the day the hottest issue is always security. And that's why Bibi will win."

"For sure, Likud [Netanyahu's party] will take it. There's no one else, only Netanyahu. Bibi is a good economist, and is tough on security," said Yaakov Halima, 79, an Iraqi-born Jew, who has voted Likud at every election for 60 years. "Security is the most important issue. There's no one dying from hunger here, everyone has a bit."

Istavsky Yvgenia, 56, a Russian immigrant, says she knows nothing about politics and has not made up her mind who to vote for. "But Bibi will win," she says, pulling her shopping trolley on to the train on her way to the market.

Polls reinforce the views of these random Jerusalemites. Israel Hayom, a giveaway newspaper owned by US casino magnate Sheldon Adelson (who is also Republican candidate Mitt Romney's principal bankroller) predicted that Likud would get 29 out of 120 seats in parliament. The party's nearest rival, Labour, was forecast to win 20, Avigdor Lieberman's Yisrael Beiteinu 15, with smaller parties trailing behind. A survey in Haaretz gave 68 seats to the rightwing bloc. On personal ratings, Netanyahu had the backing of 57% of voters – more than twice that of his nearest rival.

According to Tamar Hermann of the Open University of Israel: "Netanyahu is the only leader on the horizon. There is no other figure on Israel's political scene equal to him in experience, capability and clarity of views." Furthermore, she adds, he is a hardliner on security. He looks almost certain to lead another coalition government, the result of Israel's electoral system of proportional representation. "The balance between the left and right blocs will stay more or less the same, there's no real movement," says Avraham Diskin, a political scientist at Jerusalem's Hebrew University.

On the left, Labour has made some recovery after a decade of infighting, but its leader, former journalist Shelly Yacimovich, is seen as inexperienced, especially on security, defence and foreign affairs. She has shifted the party's focus away from the Israeli-Palestinian peace process to the social and economic issues voters say rank high in their concerns. Polls predict Labour could win 17 seats compared with its current eight. Meretz, to the left of Labour, and Hadash, an Arab-Jewish communist party, are each forecast to win three or four seats.

The demise of the left, which dominated Israeli governments for 30 years after the creation of the state, is due to "a plethora of reasons", says Hermann. She cites the collapse of the peace process, the identification of the left with the "old elite" of Jews of European heritage, the influx of Russian immigrants who "dislike anything 'pinkish'", and the resentment of Mizrahi Jews – originating from the Middle East and North Africa – who "see the left as responsible for their socio-economic isolation". According to Anshel Pfeffer, writing in Haaretz, the "moribund" left has also isolated itself. "Their voices of conscience, such as authors Amos Oz and David Grossman, have no influence beyond their little bubbles of the already converted."

The centre ground of Israeli politics is also struggling to challenge Netanyahu's hegemony. Kadima – the party formed by former prime minister Ariel Sharon after he broke from Likud – has gone into freefall. In the 2009 election, it emerged as the biggest party with 28 seats, but was unable to form a coalition government. Polls last week predicted it would probably slump to a catastrophic seven seats in January's election.

A new party, Yesh Atid, led by former TV presenter Yair Lapid, could make headway, perhaps winning around 17 seats. Its policies are largely unknown, but it is likely to position itself on the centre-right and some predict it will join Netanyahu as a coalition partner.

Its place in the polls is attributed to the appeal of its urbane leader. "Now the leader of a party is of prime importance," says Hermann. "In the past it used to be ideology and party loyalty. This is a process of the Americanisation of Israeli politics in the past 10 years or so."

Two issues are expected to dominate the three-month election campaign: the economy and security. Last summer saw protests in Israel over food prices, house prices and the cost of raising a family. "In the past, security was top of the list," says Hermann. "Socio-economic issues were further down. Now they are on an equal footing with security."

Security, for Netanyahu, primarily means Iran's nuclear programme. The Israeli-Palestinian conflict is not expected to be a significant factor. Many Israelis are content with the current situation of relative calm and do not dwell on Israel's 45-year occupation. Diskin says Iran will trump all other issues. "Netanyahu believes there is a real threat. And when there's an external threat, people unite and move to the right."

In Mahane Yehuda market, shopkeeper Abraham Levy, 63, considers Netanyahu's record. "Is he a good prime minister? Not 100% on the economy. The lowest parts of society have suffered a lot … People wait until the end of the day to buy, when prices go down. But on security, he's great. He's tough on the Palestinians, and he is the one to deal with Iran. I've always voted Likud, and I will vote for them again."