Israel's Housing Market Sees Sales Drop, Prices Decline, Rents Rise

Israel's Central Bureau of Statistics has released its year-end report, revealing a slowdown in the real estate market characterized by decreased sales and falling housing prices, alongside a significant increase in rental costs. The "Israel in Figures" report, published ahead of Rosh Hashanah, indicates a decline in buyer activity. In 2025, 80,800 new apartment construction permits were issued, with 79,700 units commencing construction. After accounting for the demolition of 6,000 older units, the net increase in housing stock was 73,700 units. Of the new constructions, 70.1% are designated for sale, with 16.2% benefiting from government subsidies. The remaining 29.9% are not for sale, and 16.2% of these are being built for rental purposes. Urban renewal programs like Tama 38 and Pinui-Binui accounted for 29.5% of all new construction. The total area of new housing initiated reached 15 million square meters. Construction was completed on 60,000 apartments, covering 10.9 million square meters, and by year-end, 207,400 units were under active construction. Construction timelines remain lengthy, with an average simple construction period of 32.3 months, extending to 37.8 months when considering building size.

Gross investments in the construction sector totaled 253.4 billion shekels, with residential properties making up 52.4%, non-residential real estate 29.2%, and civil engineering projects 18.4%. The transaction market experienced a downturn, with 90,500 apartments sold in the past year, down from 102,800 in 2024. New home sales constituted 33,900 transactions (37.5%), while the secondary market saw 56,600 sales (62.5%). Israel's total housing stock grew by 56,100 units to reach 3.02 million apartments. Of these, 69.8% are owner-occupied, 29.6% are rented out, and 0.6% are private sheltered housing complexes for the elderly.

The housing price index saw a 1% decrease, with new apartments becoming 2.8% cheaper, averaging 2.331 million shekels. Conversely, rental prices surged, with the rental price index rising by 4.3%, bringing the average monthly rent to 4,919.3 shekels.