Israeli Housing Demand Plummets Below 4% Amid Market Slowdown and Rising Interest Rates

The Israeli housing market is experiencing a significant slowdown, with demand for apartments dropping sharply to under 4% of households planning to buy in 2025, according to data presented by Dr. Doron Seig, head of housing indices at the Central Bureau of Statistics (CBS). In 2025, approximately 90,000 apartment transactions were completed, marking a 10% decline compared to 2024. The new apartment sector saw an even steeper drop of about 12%, alongside several consecutive months of falling housing prices.

The CBS survey highlights a notable decrease in potential buyers, with only 3.6% of households intending to purchase a home in 2025, down from around 8% in previous years. Dr. Seig emphasized that this decline aligns with the overall market slowdown. He also dismissed claims that developers' financing promotions distort housing price indices, clarifying that the index measures actual transaction prices rather than financing conditions.

Industry insiders note that buyers have not disappeared but have become more cautious due to the challenging interest rate environment. Il Shalev, CEO of the marketing firm Shekel, explained that buyers are taking longer to make decisions, conducting more comparisons, and facing difficulties completing purchases amid higher financing costs. He advocated for developers to offer genuine price discounts rather than just financing incentives to revive market activity.

Avi Yosfov, Vice Chairman of the Mortgage Advisors Association, added that while financing promotions have helped attract some buyers back, they are not a sustainable solution. He stressed the need for a stable housing market based on clear rules and certainty rather than temporary deals bridging current gaps.