Homebuyers Stay on the Sidelines as Housing Relief Remains Limited
Israel’s housing market is seeing a sharp drop in transactions even though buying conditions have improved somewhat over the past three years. The Alrov Housing Affordability Index, published quarterly by the Alrov Institute for Real Estate Research at Tel Aviv University’s Coller School of Management with Calcalist, says the easing so far is still not enough to make homeownership accessible for most first-time buyers in most of the cities it tracks.
In the first quarter of 2026, the average monthly mortgage payment for a standard four-room apartment, assuming a 30% down payment, was NIS 10,859. That was down 0.3% from the previous quarter, or about NIS 34, and 5.5% from a year earlier, or NIS 635. In 9 of the 12 cities surveyed, the monthly payment fell from the prior quarter. The steepest quarterly drops were in Bnei Brak, 8.3%, Bat Yam, 6.4%, and Hadera, 1.9%. By contrast, payments rose in Ramat Gan, Beersheba, and Jerusalem.
Affordability remains weak for first-time buyers in the lower income deciles. The index shows that 70% of such households, the seventh income decile and below, cannot buy a four-room apartment in 10 of the 12 cities without their monthly payment exceeding 30% of net income. In the 12 cities, the mortgage burden is about 44% of net income for the sixth decile, 39% for the seventh, and 35% for the eighth. Tel Aviv had the highest average monthly payment at NIS 16,782, followed by Jerusalem at NIS 12,196 and Ramat Gan at NIS 12,248. Beersheba was lowest at about NIS 5,117.
The down payment required also fell. It averaged about NIS 1.39 million in the first quarter of 2026, down 9.5%, or roughly NIS 146,000, from NIS 1.536 million at the start of 2025. It declined in 11 of the 12 cities, with the sharpest annual drops in Bat Yam, 23%, and Haifa, 17%. Only Rehovot saw a small increase. The index is affected by apartment prices, mortgage rates and wages: prices rose 1% from the previous quarter but were down 2.5% year on year, the average mortgage rate fell from 4.82% to 4.69%, and average household income rose 0.78% quarter on quarter and 2.75% year on year.
Despite these changes, transactions in the 12 cities fell about 20% from the previous quarter, from roughly 6,660 to 5,520, and were down 48% from the first quarter of 2025. Prof. Dani Ben-Shahar, head of the institute, said there is still “no good news for first-time buyers” because prices and interest rates remain high. He said many young couples are being pushed to the periphery and that a meaningful shift will come only with a substantial drop in both rates and prices.
