Distressed Apartment Sellers Face Steep Losses Amid Market Downturn
Translated & summarized from Ice by baba
Deputy Chief Economist Galit Ben Naim revealed that 70% of "waiting apartment" sales in July-August were by owners with at least a year until their deadline, driven by falling prices. The number of such apartments reached nearly 23,100 in August 2026, a level not seen in over a decade. This situation forces distressed sellers to accept significantly lower prices to avoid substantial capital gains taxes, with buyer cancellations posing a major risk of further financial penalties.
The story in 5 lines · by baba
- 70% of "waiting apartment" sales in July-August involved owners with at least a year until their deadline.
- The number of "waiting apartments" reached 23,095 in August 2026, a peak not seen since late 2010.
- Falling prices are forcing sellers to accept prices reverting to levels seen four years ago.
- Distressed sellers face significant capital gains taxes if buyers cancel deals.
- The central region shows particular pressure, with these sales comprising a third of upgraders' transactions.
Approximately 70% of sales for "waiting apartments" in July-August involved owners who had at least a year left until their sale deadline, according to Deputy Chief Economist Galit Ben Naim. While seemingly optimistic, this trend stems from falling prices in the second-hand market, with prices reverting to levels seen four years ago. Ben Naim explained that owners who previously benefited from rising property values and rental income by delaying sales are now forced to accept lower prices to avoid significant tax liabilities.
This situation is particularly acute for individuals owning two apartments, one of which must be sold within a set timeframe to avoid capital gains tax, a scenario termed a "waiting apartment." Ben Naim highlighted a case where a homeowner, who purchased a new apartment in late 2024, needed an extended deadline to sell their previous property. Despite the property's estimated value of 2.9-3.1 million shekels, it was sold for 2.7 million shekels just before the deadline, demonstrating the pressure to sell.
The urgency to avoid tax penalties has led to unusual transaction terms in the second-hand market, including delivery dates nearly a year after contract signing, mirroring deals typically seen with contractors. This has also resulted in financing benefits being offered on second-hand apartments.
The number of "waiting apartments" surged to 23,095 in August 2026, a level not seen since late 2010. This surplus requires over five months of second-hand sales to clear. The central region is experiencing particular pressure, with these sales comprising nearly a third of all second-hand transactions by upgraders in August. Ben Naim noted that 7% of "waiting" sellers in the center sold in the final days of the deadline, and a fifth sold in the preceding three months.
The greatest risk for sellers is a buyer's cancellation. If a buyer backs out, the seller becomes liable for an 8% purchase tax on their new property and a 25% real capital gains tax on the apartment they intended to sell, potentially costing hundreds of thousands of shekels.
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