Israel’s Average Apartment Price Rises 7.9% Despite Overall Price Index Falling 1.5%

Israel's Central Bureau of Statistics (CBS) released housing market data showing a paradox: while the housing price index dropped by 1.5% year-over-year in the second quarter of 2026, the average price of apartments sold rose by 7.9% to 2.435 million shekels. This discrepancy arises because the two metrics measure different aspects of the market. The price index is quality-adjusted, controlling for factors like location, size, and property features to reflect price changes for similar apartments over time. In contrast, the average price is a simple arithmetic mean of all transactions, which can be skewed by changes in the mix of apartments sold, known as "composition bias."

For example, if more expensive apartments in cities like Tel Aviv and Herzliya make up a larger share of sales, the average price will rise even if prices for comparable apartments fall. In Tel Aviv, the average transaction price reached 4.55 million shekels, 11.8% higher than the previous year, while the quality-adjusted index declined by 1.7%. Similar patterns were observed in other districts, with the Central District showing the sharpest annual index decline of 4.1% despite a 1.5% rise in average prices. Conversely, in the Northern District, the average price fell by 1.8% while the quality-adjusted index rose by 1.6%, indicating sales shifted toward cheaper properties.

The CBS also noted that subsidized housing transactions, excluded from the average price calculation but included in the index, increased their market share, further complicating comparisons. Additionally, new apartments tend to be pricier than second-hand ones, and their higher sales volume can push averages up. The reported contract prices for new apartments often differ from actual buyer costs due to financing deals and developer incentives, meaning the effective price paid can be lower than recorded.

The CBS updates these figures monthly as delayed transaction reports come in, so recent data may change. The housing price index is published alongside the consumer price index but is excluded from it since home purchases are considered investments, not consumption. For buyers assessing market timing, the quality-adjusted price index by district and apartment size is the most relevant indicator, while the national average price reflects the changing composition of sales rather than pure price trends. The article highlights the importance of understanding these distinctions to avoid misinterpreting housing market data in Israel.