Netanyahu Highlights Housing Price Drop Amid Rising Rents and Economic Growth

Prime Minister Benjamin Netanyahu recently claimed that housing prices in Israel have decreased for the first time in years, a statement supported by recent data from the Central Bureau of Statistics. Between March and April 2026, housing prices fell by 0.3% monthly, amounting to a 1.3% annual decline. Notably, there were two periods of eight consecutive months of price drops during his current government, a rare occurrence in the past three decades. This decline is attributed largely to high interest rates, which increased construction starts by raising financing costs for land developers and reduced demand by making mortgages more expensive.

Despite the drop in purchase prices, rental prices have continued to rise, increasing by 14% during Netanyahu's tenure. This trend is driven by demographic growth and a surge in demand for rental housing, as many young families are priced out of the buying market due to higher mortgage costs. Additionally, institutional rental housing projects have stalled because of financing challenges, exacerbating the shortage of rental units.

Netanyahu also pointed to Israel's economic growth, referencing gross national product (GNP) increases since he first took office. However, economists prefer gross domestic product (GDP) as a more accurate measure of economic activity within the country. While Israel's GDP per capita in purchasing power parity terms rose by 49% from 2003 to 2024, surpassing the OECD average growth, it remains nearly $6,000 below the OECD average. Furthermore, GDP per capita declined in 2023 and 2024, likely due to the ongoing war.

The government’s housing policy, combined with high interest rates and demographic pressures, has created a complex housing market where purchase prices have softened but rental costs continue to climb, impacting affordability for many Israelis. The economic growth touted by Netanyahu reflects long-term trends but is tempered by recent declines and persistent challenges in living standards.