Investor Apartment Purchases Plummet 30% in September Amid High Interest Rates
Translated & summarized from Ice by baba
Investor apartment purchases in Israel dropped by nearly 30% in September year-over-year, the sharpest decline in the market, due to high taxes and interest rates. Overall apartment sales fell 10% annually, with free-market transactions at a multi-year low. Contractor sales were stable year-over-year, boosted by increased financing incentives, while first-time buyer sales dipped slightly and home upgrade purchases fell significantly.
The story in 5 lines · by baba
- Investor apartment purchases fell nearly 30% in September, the steepest market decline.
- Overall apartment sales decreased 10% year-over-year in September.
- Free-market transactions reached one of the lowest levels since the early 2000s.
- Financing incentives rose to 45% of contractor sales in September.
- First-time buyer sales dropped 1% while home upgrade purchases fell 17%.
Investor purchases of apartments in Israel saw a sharp decline of nearly 30% in September compared to the same month last year, marking the steepest drop across all market segments. In total, investors bought 849 apartments in September, a significant decrease from previous periods. This downturn is attributed to several factors, including high purchase tax rates and elevated interest rates, which are making transactions economically unviable. Investors may also be adopting a wait-and-see approach due to an expiring tax provision that could lower the purchase tax from its current 8% to 5%-6% early next year.
Overall apartment sales in September reached 6,246 units, a 10% year-over-year decrease and a 17% drop from the previous month. Excluding government-subsidized sales, free-market transactions fell by 11% year-over-year to 5,377 units. This level of activity is among the lowest recorded since the early 2000s, particularly due to a significant reduction in second-hand home sales.
New apartment sales by contractors, including subsidized units, decreased by 1% year-over-year to 2,669 units in September, but fell 21% from the prior month. Free-market new home sales remained unchanged year-over-year at 1,800 units, supported by a substantial increase in financing incentives. In September, 45% of contractor sales included financing benefits, a 15-percentage-point rise from last year and the highest rate since March 2025. These incentives were most prevalent in the Be'er Sheva and Tel Aviv areas, and particularly high in the Hadera region, where 74% of contractor sales offered financing benefits.
Sales to first-time homebuyers in the free market saw a modest 1% decline to 3,005 units in September compared to the previous year. However, sales to those upgrading their homes experienced a steeper drop of 17%, with 1,523 units sold.
