Southern Israeli City Leads Nation in Canceled Real Estate Deals
Netivot has emerged as the city with the highest rate of canceled real estate transactions in southern Israel, reaching 43% of all deals in the region. This figure significantly surpasses Netivot's share of new apartments sold by contractors in the South, which stands at only 25.8%. The data was revealed by Galit Ben-Naim, deputy chief economist at the Ministry of Finance, during the Globes and Bank Leumi Israel Real Estate Conference.
Following Netivot, Eilat ranks second with 18% of southern deal cancellations, followed by Ofakim at 8.8%. Beersheba, Ashkelon, Kiryat Gat, Dimona, and Sderot reported single-digit cancellation rates. Ben-Naim indicated that the cancellations are primarily concentrated among private companies, though she did not name specific firms.
Ben-Naim highlighted that the overall cancellation rate in the South is currently a high 7%, a figure considerably elevated even compared to the peak year of 2021, when the national cancellation rate for the South was only 0.5%. She also noted a relatively high incidence of second-hand homes in the South being sold at a real capital loss, with double-digit percentages, although cities like Arad, Holon, and Haifa have seen significant decreases in such sales.
The Ministry of Finance's chief economist's office analyzes transaction documents to understand deal characteristics, categories, and financing terms, differing from the Central Bureau of Statistics' methods. Ben-Naim traced the Israeli real estate market's decline from its late-pandemic peak to a period of stagnation over the last five years. Tax policies and incentives, such as the reduction of the purchase tax to 5% in August 2020, boosted transactions to 55,000 in 2021, with 36,000 in the free market. Currently, only 22,000 apartments are sold in the free market.
Rising interest rates initiated by the Bank of Israel reversed this trend, a decline accelerated by the war's outbreak in October 2023. Ben-Naim described a diverging trend between new and second-hand apartments. Financing incentives in early 2024 initially spurred sales, leading to a record quarter for new contractor-sold apartments in the South, with 6,500 units sold in the free market alone. By December 2024, half of all apartments were sold with financing benefits, a rate that dropped to 20% by May 2025 and slightly increased to 27% in July of the current year, before slowing down as restrictions on financing benefits were imposed in early 2025.
