Foreign Buyers Surge in Jerusalem Real Estate Then Dollar Drop Slows Demand
In 2025, foreign buyers purchased 684 apartments in Jerusalem, significantly more than in Tel Aviv (186), Netanya (169), and Beit Shemesh (137), according to data released by Galit Ben Naim, Deputy Chief Economist at the Ministry of Finance. Jerusalem is traditionally a prime target for foreign investors, viewed not only as a real estate investment but also as a cultural anchor.
However, the trend shifted in early 2026 as the US dollar weakened by about 20% against the shekel, impacting foreign demand in Jerusalem. Real estate agents report a slowdown in transactions, especially in neighborhoods popular with foreign buyers. The Ministry of Finance data shows that while American purchases increased slightly in March 2026 compared to the previous year (84 versus 65), their share of total foreign purchases dropped from 53% to 49%. More notably, American purchases in Jerusalem fell by 5% in the first quarter and plunged 18% in March-April 2026.
Local real estate professionals confirm the impact of the dollar's decline. Kobi Beer, a Jerusalem-based real estate lawyer and appraiser, noted that the dollar’s depreciation effectively raised prices by about 20% for American buyers, causing a clear market halt. Aliza Friedland, a luxury real estate agent, observed a sharp drop in inquiries for high-end properties in Talbiya and a decline in transactions in Baka, another favored area for foreign buyers. Currently, most buyers in these areas are Israelis, with foreign buyers hesitating.
This cooling comes amid an oversupply in Jerusalem’s housing market, which leads the country with over 10,000 unsold new apartments. Prices have also started to decline, with the average apartment price dropping 5.5% in the first quarter of 2026 to about 2.94 million shekels, a 20% decrease year-over-year. Foreign purchases tend to focus on higher-priced properties, with a median price of 5.1 million shekels in early 2026.
Economist Matan Shtrit from Phoenix highlights that while nominal shekel prices have remained stable or declined slightly, the dollar depreciation means prices have risen about 27% in dollar terms. For example, the average apartment price for foreign buyers increased from $630,000 to $790,000 since mid-2024. Thus, although the Israeli housing market appears stable in shekel terms, it has become significantly more expensive for foreign buyers.
