Secondhand Apartment Renovations Decline Amid Market Slowdown and Rising Costs
Israel's secondhand housing market is experiencing a notable slowdown, with fewer sellers renovating their properties before putting them up for sale. Galit Ben Naim, Deputy Chief Economist at the Ministry of Finance, highlighted in a recent post that transactions remain stagnant at low levels, partly due to the large inventory of about 84,000 new apartments still held by developers, many ready for delivery. This situation makes it difficult for secondhand sellers to compete, as they cannot offer the same financing incentives as developers. Some sellers even temporarily remove listings to avoid their properties being marked as stagnant on real estate platforms.
Data from the Central Bureau of Statistics shows a sharp decline in secondhand apartment sales between February and April 2026 compared to the previous year, with Tel Aviv experiencing the steepest drop of 46.5%, followed by other major cities like Haifa, Jerusalem, and Petah Tikva. Only Herzliya and Nahariya saw increases in sales during this period. Preliminary Ministry of Finance findings reveal a trend of investors increasingly foregoing renovations costing at least 25,000 shekels before selling, based on capital gains tax reports. The southern region is an exception, showing stable or slightly increased renovation rates, possibly due to investors targeting student renters by adding bathrooms and showers.
Ben Naim suggests several possible reasons for this trend, including lower returns on renovation investments in a weak market, buyers preferring cheaper apartments to renovate themselves, and sellers struggling with high living costs and mortgage rates. Ron Novotni, CEO of Anglo-Saxon and founder of Profeli, attributes the decline partly to investors selling recently purchased new apartments that already meet developers' finishing standards, eliminating the need for renovations. He also points to rising renovation costs and labor shortages, alongside high interest rates, which discourage additional expenses.
Eran Siv, chairman of the Contractors Association, adds that the combination of security concerns and a 35-40% increase in renovation costs over recent years leads investors to avoid starting renovations they might have to halt amid escalating tensions. He notes that uncertainty causes many to postpone or cancel renovation projects, with some recovery seen after diplomatic easing between Iran and the U.S., but renewed security deterioration has reversed this trend.
The overall picture is one of cautious sellers and investors adapting to a challenging market environment marked by economic, security, and financial pressures, resulting in fewer renovated secondhand apartments entering the market.
