Housing Affordability Worsens in Israel as Down Payment Rises

The improvement in housing affordability for Israeli buyers has halted, with the second quarter of 2026 seeing an increase in both required down payments and average monthly mortgage payments. After several quarters of decline, the average monthly mortgage payment rose by approximately 9 shekels, while the required down payment increased by about 30,000 shekels.

The findings come from the Alrov Institute for Real Estate Research at Tel Aviv University, which analyzes the situation of homebuyers using two key metrics: the monthly mortgage payment and the necessary down payment for a typical four-room apartment across 12 cities. The study assumes a 70% loan-to-value ratio and a 25-year mortgage term.

While the quarterly increase in monthly payments was minimal (0.08%), there was a significant year-over-year decrease of 4.8%. However, on a quarterly basis, only five cities saw a decrease in monthly payments, with Ramat Gan and Rehovot experiencing the sharpest drops. Conversely, Rishon LeZion, Ashdod, and Bat Yam saw increases.

Despite the annual improvement, the situation remains difficult for first-time homebuyers. In 10 out of 12 cities, 70% of households in the seventh income decile and below cannot afford a four-room apartment without the monthly payment exceeding 30% of their net income. Only Beersheba and Haifa met this criterion. The average monthly payment for households in the sixth income decile reached about 44% of net income, and for the eighth decile, it was around 35%, both exceeding the 30% threshold considered reasonable.

The required average down payment in the second quarter was approximately 1.38 million shekels, an increase of about 30,000 shekels from the previous quarter. However, this still represents a 9.5% decrease, or about 144,000 shekels, compared to the same quarter last year. For households in the seventh income decile, the required down payment exceeded 740,000 shekels in nine cities, reaching as high as 2.76 million shekels in Tel Aviv. In contrast, Haifa required around 162,000 shekels.

Notably, the number of transactions for four-room apartments remained stable, with approximately 6,461 deals in the second quarter, almost unchanged from the previous quarter and the same quarter in 2025. Professor Danny Ben-Shahar, head of the Alrov Institute, commented that the market has been stagnant, with historically high mortgage payments and down payment requirements. He added that most households entering the market in major cities need over 700,000 shekels in equity for reasonable mortgage payments, forcing many to move further away from central areas towards cities like Haifa or Beersheba.