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 to historic lows. According to Dr. Doron Seig, head of housing indices at the Central Bureau of Statistics (CBS), about 90,000 apartment transactions were completed in 2025, marking a 10% decline compared to 2024. The new apartment sector saw an even sharper drop of approximately 12%, alongside several consecutive months of falling housing prices.

A CBS survey revealed a steep decline in public intent to purchase homes, with only 3.6% of households planning to buy in 2025, down from around 8% previously. Seig emphasized that this drop in potential buyers 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.

Private market experts note that buyers have not disappeared but have become more cautious due to the challenging interest rate environment. Il Shalev, CEO of "Shekel," which monitors national marketing trends, explained that buyers are taking longer to make decisions, conducting more comparisons, and facing difficulties completing purchases because of financing costs. He advocated for developers to offer genuine price discounts rather than just financing incentives, citing past consumer club promotions that successfully boosted sales when discounts impacted the final price.

Avi Yossifov, vice chairman of the Mortgage Advisors Association, stated that demand remains but is waiting for stable conditions that allow families to decide confidently. While financing promotions have helped bring some buyers back, he stressed that a healthy housing market requires stability, clear rules, and certainty rather than temporary campaigns bridging current gaps.