Lowering Buyer Tax Won't Bring Property Investors Back, Writer Says

A Hebrew opinion piece argues that the real debate is not whether Israel should cut purchase tax on investment apartments from 8% to 5% to 6%, but why investors have already left the market. Even if the government restores the tax to its previous level in early 2027, the writer says it is unlikely to trigger a fresh wave of buying.

The article cites first-quarter 2026 data showing only about 3,568 apartments bought for investment in Israel, one of the weakest figures of the past decade. By comparison, more than 9,100 investment apartments were purchased in the first quarter of 2015, before the tax increase. The writer says the drop reflects a broader shift, not just tax policy.

For years, the market benefited from low interest rates, cheap credit, a booming high-tech sector, relative stability and strong demand. Today, the piece says, borrowing costs are much higher, financing is more expensive, high-tech is no longer the same growth engine, and security concerns add uncertainty. At the same time, investors have new alternatives in capital markets, including cash funds, bonds, indexes and stocks, which offer liquidity and less hassle than mortgages, maintenance, tenants, taxes and regulatory risk.

The article says the larger problem is that when investors stop buying, they stop adding homes to the rental market. That reduces rental supply, increases competition among tenants and pushes rents higher, affecting even people who never planned to buy a home. The author concludes that the state must view the issue as a housing-supply and rental-market problem, not only a tax or investment issue, and says investors are waiting for prices, yields or risk conditions to improve before returning. The author is the CEO and founder of Kovanistown, a real estate and tourism investment company.