Mizrahi Tefahot executive predicts housing buyers will return and prices will rise again

Shvay Shamir, deputy CEO and head of the retail division at Mizrahi Tefahot, said Israel's housing market should not be judged by headlines about 86,000 unsold apartments, but by supply and demand. Speaking at the bank's real estate conference with Yedioth Ahronoth Group, she argued that national prices have trended upward for decades and that temporary pauses do not change the broader pattern.

Shamir said the current decline in prices, which she described as the third such downturn, should be examined region by region. She noted that Jerusalem and Tel Aviv together account for more than 20% of the unsold inventory, about 10,000 to 11,000 apartments in Tel Aviv alone, yet the two cities are moving in opposite directions, with prices rising in Jerusalem and falling in Tel Aviv. In Jerusalem, she said, overseas antisemitism is boosting demand for luxury homes, while cheaper homes are seeing slower demand. In Tel Aviv, she linked the fall to investors waiting on the sidelines.

She added that local conditions also explain trends in the north and south. In Haifa, prices are rising, while in Afula and Nahariya they are falling, because security concerns are pushing buyers toward homes with protected rooms and away from the farther north. In Netivot and Ashkelon, she said, there is now reverse migration, stronger development, better accessibility and rail links for people working in central Israel, which is supporting prices even as inventory remains available.

On rentals, Shamir said prices will keep climbing. She said roughly 20,000 of the 80,000 apartments are tied to urban renewal projects, which displace residents and increase demand for rental housing while supply remains limited. She also said fewer than 5% of tenders are for rental housing, and that in a high-interest environment developers prefer urban renewal because land costs are not included. Looking ahead, she said that if interest rates fall by two more steps this year, buyers who are currently waiting will return, and unless something dramatic happens, prices will rise again.