Housing Prices in Israel: Sharpest Decline in Eight Years
The Israeli real estate market continues to undergo a correction, with falling housing prices accompanied by slowing inflation. This trend increases expectations of a possible easing of monetary policy and may affect the activity of buyers and investors, Calcalist reports citing data from the Central Bureau of Statistics.
Housing price dynamics in Israel
In April–May 2026, housing prices in Israel decreased by 1% on average compared with March–April. This was the largest two-month decline since December 2017–January 2018. In annual terms, apartment prices were 2% lower than a year earlier. The downward trend has continued since March 2025. During this period, price growth was recorded only in two reporting periods, while the overall market has remained in correction.
Regional price trends
The most significant decline was recorded in the Tel Aviv District, where prices fell by 2.3% over two months and by 2.5% year-on-year. In the Jerusalem area, apartment prices decreased by 1.8% in April–May but were still 0.3% higher compared with spring 2025.
In the Haifa District, prices declined by 0.5% over two months and by 2.6% annually. In the Central District, no short-term change was recorded, but prices fell by 3.2% over the year. In the Southern District, housing costs decreased by 0.5% over 12 months. The Northern District was the only region where prices increased year-on-year, rising by 1.4%.
New housing market in Israel
Prices for new apartments declined by 0.1% in April–May 2026 compared with the previous two-month period. In annual terms, the cost of new housing decreased by 3.9%.
The dynamics of the primary market are influenced by the high share of transactions carried out with government support. In April–May, 37.5% of all purchases of new apartments were made through initiatives such as “Apartment with a Discount”, “Buyer’s Price” and other similar schemes.
These initiatives provide buyers with subsidies and discounts that can reach hundreds of thousands of shekels. As a result, transactions completed through preferential mechanisms are included in overall market statistics and affect the average price level of new apartments.
Real housing prices have fallen 20% over four years
The CEO of Israel’s largest construction company Tidhar, Uri Levin, said official figures do not fully reflect the actual situation in the housing market. According to his estimate, the real cost of apartments has declined by around 20% over the past four years due to the widespread use of discounts, incentives and financial offers by developers.
Developers increasingly rely on various sales incentives instead of directly reducing listed prices. As a result, the actual transaction value decreases, but this trend is not always reflected in the statistics of Israel’s Central Bureau of Statistics.
Uri Levin described the current period as one of the most challenging in the history of Israel’s real estate market. At the same time, he noted that the sector’s fundamental indicators remain strong and that the Israeli market remains one of the strongest in the world.
Inflation in Israel slows to 1.6%
The real estate market is also affected by the broader economic environment. In June 2026, inflation slowed from 1.9% to 1.6%. Monthly price increases were recorded in culture and entertainment (+1%), housing (+0.7%), healthcare (+0.6%) and food products (+0.4%). Prices declined for fresh vegetables and fruit (-5.2%), clothing and footwear (-2.7%), transport (-0.7%), as well as furniture and household equipment (-0.5%).
The main factor preventing the index from falling was an increase in housing services for homeowners. This component rose by 0.9% in June, adding around 0.17 percentage points to the monthly change. Without this factor, annual inflation would have been 0.9%.
Other notable changes included a 5.1% increase in accommodation, leisure and travel services, as well as a 1.1% rise in dairy product prices. The decline in car insurance costs and overseas travel prices helped offset part of the increase. Seasonal factors also played a role; without them, the overall price level in June would have risen by 0.1%.
Outlook for Israel’s housing market
International Investment analysts note that changes in the housing market are partly linked to restrictions introduced by the Bank of Israel in March 2025. The regulator limited financing schemes in which buyers paid only a small portion of the apartment price upfront, with the remaining amount deferred under preferential terms. After these measures, developers’ ability to support demand through such mechanisms declined.
Slowing inflation increases the likelihood of further cuts to the Bank of Israel’s key interest rate, which could improve financing conditions in the real estate market in the future. However, geopolitical risks and domestic political uncertainty remain key challenges.
The decline in prices has not yet made housing in Israel significantly more affordable, while returns on residential real estate remain relatively low. As a result, many Israeli investors are considering alternative markets, including Georgia, where there are no restrictions for foreign buyers, prices are considerably lower and rental yields are higher.