Israel Faces Economic Strain from Unprecedented Emigration Wave

Israel has experienced an unprecedented wave of emigration over the past three years, with 209,300 individuals leaving the country. The peak of this outflow occurred in the last Jewish year, when 57,000 citizens departed, following 69,500 in 2015 and 82,800 in 2014. During the same period, 64,000 people returned, resulting in a net population decrease of 145,300 citizens.

The majority of those who left were Jews and Israeli passport holders, including young people and highly skilled professionals in medicine, high technology, and scientific research. The departure of this demographic has placed a significant burden on the economy, as these individuals often had above-average earning potential and paid substantial taxes. Their emigration has reduced state budget revenues from income and corporate taxes, increasing financial pressure on remaining taxpayers.

The decline in the affluent population has directly impacted the real estate market. A decrease in demand for apartments has led to a nationwide drop in housing prices by approximately 7-8% compared to peak levels in late 2022. While the Central Bureau of Statistics noted mixed trends in new and secondary housing markets with alternating periods of decline and growth, overall transaction activity has also decreased.

In July of this year, 4,724 sales of secondary housing were completed, an 11% decrease from the same period last year. Companies involved in housing development saw their transaction volumes shrink by about 18%. Investors are continuing to sell more properties than they acquire, indicating a reduced interest in the real estate sector. The most significant drop in investments, up to 26% year-on-year, was recorded in the Central District and Tel Aviv.