Apartment Prices Dip Slightly Post-War, Long-Term Gains Remain Significant

Recent minor declines in Israeli apartment prices since the start of the war are primarily attributed to rising interest rates, which have deterred buyers, especially following a 30% price surge over the two years prior. New Central Bureau of Statistics (CBS) data distinguishes for the first time between prices of new and second-hand apartments, though the distinction is not entirely novel. While overall apartment prices and new apartments saw a slight increase in June-July, second-hand apartment prices, measured quarterly (April-June), showed a 1.2% decrease. This discrepancy is partly due to the timing of data collection and the initial post-war dip in demand for apartments without protected rooms (mamad), a trend that has since somewhat recovered.

Over the past five years, from mid-2021 to mid-2026, the overall increase in apartment prices reached 29.3%, with new apartments rising 25.2%. This indicates that second-hand apartments experienced a sharper increase during that period, making the current decline appear more natural. The CBS data reveals that an average annual return of nearly 6% was achieved by those who purchased apartments five years ago. Specifically, second-hand apartment owners saw an average annual appreciation of about 7%, compared to 5% for new apartments. These returns significantly outpaced those from more conservative investments, especially considering that current interest rates, including the prime rate, have not reached such levels.