Israeli Housing Market Sees Sales Jump, With Notable Shifts in City Performance

The Israeli housing market experienced a significant surge in apartment purchases between May and July this year, marking a nearly 13% increase compared to the preceding three months, even after accounting for seasonal factors. This period, which excluded the brief 12-day war with Iran last year, showed a robust recovery in new apartment sales, a key indicator of the financial health of developers.

While overall sales were strong, the performance varied considerably across different cities. Tel Aviv, surprisingly, saw a 22% rise in new apartment sales, defying expectations of a slowdown in the expensive market. This increase is particularly noteworthy given the city's typically high prices and lower demand for older apartments lacking bomb shelters. In contrast, Jerusalem, another major, high-priced market, recorded a decrease in sales, which analysts attribute to its expensive nature.

Several other cities also demonstrated strong growth. Or Yehuda, Ashdod, and Kiryat Gat reported significant increases in sales, especially among cities selling 300 or more apartments monthly. Peripheral cities like Kiryat Gat, Ashkelon, and Ofakim are now centralizing a larger share of sales, a departure from previous trends. Even Tel Aviv's sales of over 350 apartments per month indicate a market far from stagnant.

However, some cities struggled significantly during this period. Ramla, Rishon Lezion, and Netanya stood out for their weakness, with Netanya selling only 180 apartments between May and July, experiencing a notable decline while its second-hand market remained sluggish. Analysts suggest that currency fluctuations might have impacted sales in cities like Netanya and Jerusalem, which attract a considerable number of foreign residents, particularly French buyers in Netanya and Americans in Jerusalem.

Despite the overall positive trend, developers face challenges. Approximately one-third of the 10,470 apartments sold between May and July were under government subsidy programs. Excluding these subsidized units, the number of sales for developers was around 2,300 to 3,500, which is considered a weak performance, indicating pressure on contractors, especially in cities like Netivot which has seen both weak sales and cancellations.