Real Estate Slump Costs Israel $60 Million in Tax Revenue
Translated & summarized from Israel Hayom by baba
Israel's tax revenue from real estate fell by approximately 230 million shekels in September due to a prolonged market slump. The number of apartment purchases decreased by 4% in July, with new housing transactions down 9%. Unsold inventory remains high, pressuring developers and delaying market recovery. This trend is expected to continue impacting government tax collections.
The story in 6 lines · by baba
- Israel's property tax revenue dropped by 230 million shekels in September due to a market slowdown.
- Apartment purchases fell 4% in July, with new housing transactions down 9%.
- Unsold new apartments reached approximately 85,000 units by the end of July.
- This inventory represents nearly 27 months of supply at the current sales pace.
- Apartment prices have decreased by 1.2% in the year ending July 2026.
- The Central District saw a sharper price drop of 3.2%.
Israel's real estate market slowdown has led to a significant drop in state revenue from property taxes. In September, tax collections from real estate amounted to approximately 1.3 billion shekels, a decrease of about 230 million shekels (around 15%) compared to the same month last year. This decline is attributed to the ongoing slump in the property market, which has persisted since the beginning of 2026.
The weak performance is characterized by a reduction in the number of transactions, particularly in the new housing market. This reflects difficulties faced by developers in attracting buyers and a general cautiousness among households. The slowdown impacts potential revenue from both purchase taxes and capital gains taxes, as these are directly tied to the volume and value of property sales.
Official data indicates moderate demand, with 7,692 apartments purchased in July, a 4% decrease from the previous year. Excluding government-subsidized deals, the drop in transactions in the free market was even steeper, at 9%. Despite some signs of price stabilization in recent months, apartment prices have fallen by 1.2% in the year ending July 2026, with a more pronounced decrease of 3.2% in the Central District.
Developers are facing pressure from a substantial inventory of unsold new apartments, estimated at around 85,000 units by the end of July. This stock represents nearly 27 months of supply at the current sales pace, compelling developers to offer discounts and financing incentives. Many potential buyers are adopting a wait-and-see approach, and the imbalance between supply and demand is hindering market recovery. If transaction volumes do not increase substantially, the government can expect continued weakness in property tax collections in the coming months.
