Overview of Israel's Real Estate Market and 2025 Forecasts

In September and October 2024, real estate prices in Israel rose by 0.5% compared to July-August and by 6.2% compared to the same period in 2023, The Times of Israel reports citing data from the Central Bureau of Statistics. Prices have continued to increase despite ongoing military actions and challenging geopolitical circumstances.

Sales and Construction

Increases in property prices by region:
- Northern District: Prices rose by 1.5% compared to the previous two months.
- Tel Aviv: Prices increased by 1%.
- Central and Southern Districts: Prices went up by 0.4%.
- Decreases: Prices dropped in Jerusalem (-0.4%) and Haifa (-0.2%).

According to the Ministry of Finance, 5,111 apartments were sold in October 2024, more than double the sales in October 2023, when the real estate market reached a historic low due to the outbreak of war on October 7.

Sales in October were 38% lower than in September, a decline analysts attribute to fewer working days due to holidays. Similar trends were observed in October 2022, which also had a comparable number of holidays.

Investors purchased 828 apartments and sold 885, reflecting declines of 11% and 16%, respectively. 110 apartments were bought by foreign nationals, compared to just 42 similar transactions in October 2023.
Construction Activity:

In Q3 2024, new construction starts rose to 16,400 units, up from 13,600 in April-June.
The total number of units under construction reached 178,000.
12,400 units were completed during the quarter, according to Bank Hapoalim.

Housing Prices and Property Types

Based on December 2024 data from the Israel Tax Authority:

Tel Aviv

2-bedroom apartment: 66 sqm on Kehilat Lod Street, 44, sold for 3.2 million shekels ($894,000), third floor, includes parking, building constructed in 2021.
3-room apartment (80 sqm): Located at Hagibbor Ha’Almoni Street, 33, purchased for 3,075,000 shekels ($839,258).
4-room apartment (87 sqm): Emek Ayalon Street, 14, sold for 4.4 million shekels ($1.09 million). All properties were in seven-story buildings.

Jerusalem
3-room apartment (65 sqm): Shmuel Hanavi Street, 55, sold for 3,050,000 shekels ($831,278), third floor of a four-story building from 1940.
3-bedroom apartment (75 sqm): Sol Lipchin Street, 12, purchased for 2.5 million shekels ($695,192), first floor, six-story building from 2014.
4-room apartment (92 sqm): Hasofet Haim Cohen Street, 10, sold for 3.2 million shekels ($886,015), first floor, 25-story building.
Beit Shemesh
4-room apartment (91 sqm): David Raziel Street, 5, bought for 1.7 million shekels ($602,931), second floor, four-story building from 1985.
Haifa
3-bedroom apartment (115 sqm): Halamish Street, 13th floor of a 16-story building from 2003, sold for 1.3 million shekels ($376,642).
Rentals
Data from Madlan was used for rental market analysis, focusing on 3-room apartments (2-bedroom units).

Tel Aviv

70 sqm apartment: Sheinkin Street, 26, listed for 10,265 shekels ($2,797) per month. Features include a foyer and two balconies.
Jerusalem
60 sqm apartment: Ramban Street, 15, in the Rehavia neighborhood, offered for 7,500 shekels ($2,043) per month. Located on the first floor, it comes furnished with access to a shared garden.

Haifa

67 sqm apartment: Amal Street, 33, first floor of a four-story building, rented for 3,600 shekels ($981) per month. The unit is partially furnished, recently renovated, and lacks an elevator and concierge.

Economic Development Forecasts

Experts at Leader Capital Markets predict a slowdown in Israel’s real estate sector in 2025, with fewer new apartment sales and a deceleration in the banking boom. However, other sectors, including construction, are expected to recover and expand.

End of War and Normalization: Improved international relations are anticipated, alongside a return of foreign investors.
Economic Pressure: Post-war policies are likely to strain credit portfolios. Inflation and interest rates are expected to remain relevant but with less impact on bank profits.

Defense Sector: Long-term investments in rearmament and modernization will sustain growth, though a lasting peace might lead to slower momentum.
Leader's analysis suggests cautious optimism for the construction and infrastructure sectors in 2025. The post-war housing deficit and growing infrastructure needs could accelerate project launches. Large infrastructure tenders and finalized financial arrangements for existing projects are expected, benefiting major companies in these sectors over the coming years.