Mizrahi Tefahot CEO Says Real Estate Can Rebound as Stability Returns

At the national real estate conference “Building the Future,” Mizrahi Tefahot CEO Moshe Lari said Israel has spent more than two and a half years in a difficult period, but the economy is still behaving differently from the security situation. He said the housing market remains one of the country’s main growth engines, alongside high-tech.

Lari argued that real estate contributes about 15% of GDP and growth, roughly 20% of state revenues across its value chain, and about 10% of total employment. He said the sector has been weighed down by higher raw-material costs, supply-chain delays, a shortage of skilled workers, high interest rates, security concerns and bureaucracy. Demand has cooled, especially in first-sale transactions, while supply has kept rising through new construction starts and land marketing.

As a result, unsold inventory has reached a record 86,000 apartments, up from about 40,000 three years ago. He also said the stronger shekel has made apartments significantly more expensive for foreign buyers, new immigrants and other overseas purchasers, by tens of percent and hundreds of thousands of dollars in the currency they use.

Despite warnings that developers will collapse and prices will plunge, Lari said he does not think that is the current reality, citing responsible behavior by developers, contractors and lenders. He said that if the security situation stabilizes and inflation and interest rates ease, demand and activity should rise. He added that Israel should not be viewed as one uniform market, because the south, north and Tel Aviv area differ sharply, and that housing is a real market driven by genuine demographic and social needs, including immigration. He also said mortgage activity is strong, with 2025 ending at NIS 106 billion and 2026 expected at NIS 110 billion to NIS 120 billion. On contractor-financed loans, he said they are “a right and proper product,” and cited internal bank data showing about NIS 1 billion in such loans repaid over time, with almost no cancellations, 70% of borrowers completing the deal and refinancing, and 30% repaying without taking a long-term mortgage.