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What will happen in Israel’s real estate market? Will prices go up or down? Is Tel Aviv still a hotspot for foreign investors? How is Israel’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with real estate agents, developers, and clients who buy properties in Israel, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Property prices in Southern Israel will drop slightly as new developments exceed demand
In Southern Israel, property prices are expected to dip slightly as new developments outpace demand.
There's been a significant rise in construction permits in the region, leading to a surplus of available properties. The Southern District is bustling with new apartment sales, yet the high number of unsold units signals an oversupply. By June 2023, there were 11,000 unsold new apartments, enough to last for another 18 months at the current sales rate.
This surplus clearly shows that the supply of new housing is outstripping buyer demand. While the population in Southern Israel is growing steadily, it hasn't matched the rapid increase in housing supply, creating a mismatch between supply and demand.
Real estate market reports emphasize the surplus of available properties in the area. Even though the Southern District saw a smaller drop in new apartment sales compared to other districts, the overall picture suggests a potential decline in property prices due to the excess supply.
Experts predict market saturation in areas with high construction activity and limited demand, which fits the current situation in Southern Israel. This trend is particularly evident in regions where construction is booming but buyer interest is lagging.
Sources: Globes, Semerenko Group, Israel National News
2) Demand for homes in Israel will rise due to new tax incentives for first-time buyers
In 2023, Israel experienced a 97% increase in first-time home purchases compared to the previous year.
This boom is largely thanks to favorable financing conditions and government subsidies, which have made buying a home more appealing. The new tax incentives are a game-changer, easing the financial load on first-time buyers. For example, there's an exemption from purchase tax on the first ₪1,978,745 of a home's value, and a reduced tax rate of 0.5% on the remaining value up to ₪6 million, which significantly cuts costs.
Already, real estate market reports from early 2024 show these incentives are working. In the Central Region, home sales have jumped by 62% compared to the previous year. This isn't just a local phenomenon; places like Ashdod and Jerusalem are seeing similar spikes in demand.
These tax breaks are making waves across the country, drawing in more buyers who might have been hesitant before. The buzz is that these incentives are not just a temporary fix but could lead to a long-term shift in the market. The idea is to make homeownership a reality for more people, and it seems to be working.
Insiders are saying that this could be the start of a new era in Israel's housing market. With more people able to afford homes, the landscape is changing. It's not just about numbers; it's about making homeownership a real possibility for many who thought it was out of reach.
So, if you're thinking about buying a property in Israel, now might be the perfect time to dive in. The market is hot, and these incentives are making it easier than ever to own a home.
Sources: Jerusalem Post, Globes, Globes
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Israel versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Rental yields in the Negev will rise as new industries boost job opportunities and housing demand
The Negev region is on the brink of a rental yield boom thanks to new job opportunities and rising housing demand.
Government investments are transforming the area, especially with the Ben-Gurion Advanced Technologies Park (ATP) in Beer-Sheva. This park is a magnet for big names like Dell, IBM, and Deutsche Telekom, turning the region into a tech innovation hotspot.
With nearly 2,000 employees and 70 high-tech companies, the ATP is bustling. This surge in business activity is fueling a wave of new job opportunities, drawing more people to the Negev and pushing up housing demand.
The tech and renewable energy sectors are booming here, with startups like Consis Medical and Echo Care leading the charge. These industries are not just creating jobs; they're attracting new residents eager to join the action.
As more people flock to the Negev for work, the demand for housing naturally rises. This influx is driving rental yields higher, making it a promising spot for property investors.
Sources: Americans for Ben-Gurion University, Global Property Guide
4) Property prices in Northern Israel will rise moderately as better infrastructure improves accessibility
Northern Israel is becoming more accessible thanks to significant infrastructure upgrades.
The Israeli government is investing heavily in transportation, with projects like new rail lines and highways. One major development is the expansion of the coastal line between Tel Aviv and Haifa, which will make travel faster and more frequent. This is a game-changer for the region.
These improvements are attracting homebuyers, as seen by a 24% increase in new homes built in the Northern District in 2022. This surge indicates a growing interest in the area, likely because it's now easier to reach.
As more people move in, property prices are on the rise. In Kfar Saba, for example, home prices were notably high in early 2023. This trend is expected to continue as the region gains popularity due to better infrastructure.
With these changes, Northern Israel is becoming a more attractive option for potential homeowners. The improved accessibility is not just a convenience; it's a catalyst for economic growth and increased property values.
For those considering buying property, now might be the time to look north, where infrastructure improvements are paving the way for a vibrant future.
Sources: Railway Gazette, Global Property Guide, AFS Law
5) Rental yields in Jerusalem will stay steady as cultural and religious importance keeps demand high
Jerusalem's rental market is thriving, thanks to its unique cultural and religious significance that keeps demand high.
In 2023 and 2024, the city enjoyed a high occupancy rate in its rental market, with short-term rentals booked for an average of 201 nights a year. This means that more than half the time, these properties are occupied, showing a steady demand for rental properties.
About 66.85% of guests in Jerusalem's Airbnb listings were international visitors, including tourists and religious pilgrims. This steady stream of international guests underscores the city's ongoing appeal and the constant need for accommodations.
Jerusalem's population is growing, with over 1 million residents and a natural increase of 20,500 more births than deaths in 2023. This growth further fuels the demand for housing, making it a vibrant market for potential property buyers.
The city's cultural and religious events, like the Jerusalem Festival, draw visitors year-round, ensuring a consistent demand for accommodations. This is great news for anyone considering investing in rental properties here.
With limited land available for new developments, the supply of rental properties remains tight, helping to maintain stable rental yields. This scarcity of land prevents a flood of new properties that could otherwise lower rental prices.
Sources: Airbtics, Globes, Apartment in Israel
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6) Demand for retirement communities and assisted living in Israel will grow as the population ages
In Israel, life expectancy has climbed to 83.49 years as of 2023, meaning people are living longer than ever.
By 2035, over 1.6 million Israelis will be 65 or older, making up nearly 14% of the population. This shift means more folks will need places like retirement communities and assisted living facilities.
The Central Bureau of Statistics has flagged this aging trend as a big deal, pushing the government to rethink public services. Senior housing options need to expand to keep up with the demand.
Real estate is already catching on, with more investments pouring into senior housing. This is a clear sign that the market is gearing up for the growing need.
As the population ages, the demand for retirement communities and assisted living facilities is set to rise. This trend is reshaping the real estate landscape in Israel.
For those considering property investment, the aging population presents a unique opportunity to tap into the senior housing market.
Sources: Worldometers, Jerusalem Post, Central Bureau of Statistics, Statista, Jewish Virtual Library
7) Demand for larger family homes will grow in certain areas as the ultra-Orthodox population increases
The ultra-Orthodox community in Israel is growing fast, and this means a bigger need for larger family homes in certain areas.
With a fertility rate of 6.4 live births per woman in 2023, ultra-Orthodox families are expanding much quicker than other Jewish families, who have a rate of 2.5. This difference is a key driver for the housing demand.
By 2030, the ultra-Orthodox are expected to make up 16% of Israel's total population, and by 2033, their numbers could hit two million. This rapid growth translates to more families needing homes that fit their size.
Traditionally, ultra-Orthodox families lived in smaller apartments, but now there's a noticeable shift. In Beit Shemesh, for example, 8,602 apartments were purchased by ultra-Orthodox families from 2018 to 2021, showing a clear trend towards larger homes.
Neighborhoods with significant ultra-Orthodox populations are seeing this change firsthand. The demand for bigger living spaces is becoming more apparent as families grow larger.
Sources: IDI, Buy It In Israel, IDI Statistical Report
8) Tel Aviv’s luxury apartment market will slow down as buyers look for cheaper options in nearby cities
Tel Aviv's luxury apartment market is feeling the heat as prices continue to climb.
By mid-2024, the average price for a four-room apartment in Tel Aviv had skyrocketed to NIS 4.75 million, a steep jump from late 2023. This surge has pushed many potential buyers to look elsewhere.
Nearby cities like Herzliya and Ramat Gan are becoming attractive alternatives. In Herzliya, a similar apartment costs around NIS 3.8 million, while in Ramat Gan, it's about NIS 3.3 million. These cities offer more budget-friendly options, drawing in those who can't afford Tel Aviv's prices.
There's also a growing interest in northern Israel, with places like Tiberias and Afula gaining popularity. The second quarter of 2024 saw a noticeable uptick in housing deals in these areas, indicating that buyers are seeking better value for their money outside of Tel Aviv.
Tel Aviv's luxury market is showing signs of slowing down. In August 2024, the high-end housing sector experienced a slowdown, hinting at a broader trend of buyers moving towards more affordable options.
Reports of stagnating or declining sales in Tel Aviv's luxury market further emphasize this shift. Despite some recovery, the market's slowdown reflects a growing preference for more affordable housing elsewhere.
Sources: The Judean, Global Property Guide
We have made this infographic to give you a quick and clear snapshot of the property market in Israel. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Rents in Tel Aviv will rise as it stays a cultural and economic center
Tel Aviv is buzzing with growth, adding 74,870 new residents last year.
This surge in people means more folks are looking for places to live, naturally pushing rents higher. But here's the catch: the city hasn't built enough new homes to keep up. Over the past few years, housing only grew by 5%, from 211,000 to 222,000 units, which isn't enough to meet the demand.
Tel Aviv is a magnet for tech talent, ranked as the #4 startup ecosystem globally. This attracts high-tech companies and well-paid professionals, which in turn drives up the cost of living. The city's vibrant culture and nightlife are also big draws, especially for younger folks who love the urban vibe.
With its bustling tech scene and lively atmosphere, Tel Aviv is a hotspot for expats and international businesses. This reputation makes it a desirable place to live, adding even more pressure on the housing market. The city's appeal isn't just local; it's global, and that keeps demand high.
As more people flock to Tel Aviv for its opportunities and lifestyle, the housing crunch is likely to continue. The limited supply of new homes, combined with the influx of high-earning residents, means rents are set to keep climbing. It's a classic case of demand outstripping supply, and in a city as dynamic as Tel Aviv, that's not changing anytime soon.
Sources: Globes, Globes, Startup Genome, World Population Review, Talkpal
10) New development costs will rise due to stricter environmental rules, affecting property prices
Stricter environmental regulations are making it more expensive to build new properties.
In Israel, developers must adhere to the Green Building Standard (IS-5281), which means using sustainable materials that often cost more than traditional ones. This is not just a local issue; it's a trend seen in many places where environmental rules are tightening.
The OECD Environmental Performance Reviews: Israel 2023 report highlights that improving waste management and moving towards a circular economy will likely increase costs for developers. These costs usually trickle down to buyers, pushing property prices higher.
Back in 2011, when Israel expanded its Green Building Standard, developers faced higher compliance costs. This pattern isn't unique to Israel; other countries have experienced similar hikes in construction costs due to stricter environmental regulations.
For potential buyers, this means that as developers spend more to meet these standards, property prices are likely to rise. It's a ripple effect that starts with the cost of materials and ends with the price tag on a new home.
So, if you're considering buying property, keep in mind that these environmental regulations, while beneficial for the planet, can impact your budget significantly.
Sources: Constructive Voices, OECD Environmental Performance Reviews, Global Property Guide
11) More foreign buyers will seek properties in Herzliya because it's known as a high-end residential area
Herzliya is becoming a hotspot for foreign property buyers due to its upscale reputation.
Property prices in Herzliya are on the rise, reflecting this high demand. For example, in October 2023, newly built semi-detached houses in Herzliya Pituah sold for NIS 16 million and NIS 17 million, marking a significant jump from previous sales. This surge in prices underscores the area's appeal to those seeking luxury living.
Foreign investment in Israeli real estate is also climbing, with Herzliya being a prime target. In July 2024, foreign residents purchased 174 apartments in Israel, with a substantial number of these transactions taking place in Herzliya. This trend indicates a growing interest from international buyers who are drawn to the area's unique offerings.
Herzliya's charm is further boosted by ongoing development projects. These include urban regeneration and new infrastructure, which are enhancing the area's desirability. Improved public transport access and long-term value boosts are making Herzliya even more attractive to potential buyers.
Its proximity to Tel Aviv adds to Herzliya's allure, especially for professionals. The area offers more space while still being close to the bustling business opportunities of Tel Aviv. This makes Herzliya an ideal location for those seeking a balance between work and leisure.
With its combination of luxury, development, and strategic location, Herzliya is set to continue attracting foreign buyers. The area's reputation as a high-end residential zone is only getting stronger, making it a prime choice for international investors.
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12) Demand for co-living spaces in Tel Aviv will grow as young professionals look for affordable housing options
Tel Aviv's property prices have skyrocketed, making it tough for young professionals to afford traditional housing.
By the end of 2023, the average price for a four-room apartment in Tel Aviv hit NIS 4.75 million, a steep climb from previous years. This surge has left many young professionals scrambling for affordable options. The city's vibrant job market and high salaries continue to draw in young talent, further fueling the demand for housing.
Many of these young professionals are on the hunt for flexible living arrangements. Co-living spaces, which offer community and cost-sharing, are becoming increasingly attractive. These spaces provide a sense of community and shared expenses, aligning perfectly with what young professionals are seeking.
Co-living startups are popping up all over Tel Aviv, with companies like Venn leading the charge. Venn's expansion into multiple cities, including Tel Aviv, underscores a growing trend towards co-living in urban areas. This shift is not just a local phenomenon but part of a broader movement in major cities worldwide.
Media coverage often highlights the perks of co-living, making it an appealing choice for young professionals. The benefits of co-living, such as affordability and community, are frequently showcased, adding to its allure.
As more young professionals flock to Tel Aviv, the demand for co-living spaces is expected to rise. These spaces offer a practical solution to the city's housing challenges, providing affordable and flexible living options. Co-living is becoming a key player in Tel Aviv's housing market, catering to the needs of its growing young professional population.
Sources: The Judean, Semerenko Group, Inman
13) Interest in Haifa's real estate will grow as the port expansion draws international business
Haifa's real estate market is buzzing thanks to the recent expansion of its port.
In 2023, Indian billionaire Gautam Adani's acquisition of Haifa Port marked a big leap in foreign investment. This wasn't just about the port; it was about integrating Israel more deeply into the Middle East and boosting economic ties with South and East Asia. The ripple effect? Property prices in Haifa are climbing.
By the end of 2023, housing prices in Haifa had jumped by 9%, outpacing the national average. Take Hadar Carmel, for example, where a 3-room apartment saw a significant price hike in just a year. This surge reflects a growing demand for real estate, fueled by the city's changing economic scene.
The port expansion isn't just affecting residential properties. There's a noticeable uptick in demand for commercial real estate too. As Haifa positions itself as a key player in global trade, businesses are eager to set up shop in the city. This is part of a larger plan to strengthen Israel's economic connections with India and the Middle East.
Haifa is becoming an attractive hub for international business, thanks to its strategic location and the port's expansion. The city's evolving landscape is drawing attention from companies worldwide, making it a hotspot for investment. Haifa's transformation into a global trade center is well underway.
Sources: Globes, Middle East Eye, Haipo
14) Property demand in Ashdod will surge unexpectedly as new tech investments pour in
The coastal city of Ashdod is seeing a surprising surge in property demand, thanks to new tech industry investments.
At the heart of this transformation is the tech incubator at Ashdod Port, which has supported over 90 startups since 2021. This initiative is not just about fostering innovation; it's about creating a vibrant tech ecosystem that attracts professionals from all over. With these new opportunities, more tech-savvy individuals are making Ashdod their home.
Adding to the city's allure is the development of public transport and commercial centers, which are making life easier for residents. Improved infrastructure means less time commuting and more time enjoying what the city has to offer. This is a big draw for tech professionals who value convenience and connectivity.
In the broader context, property prices in Israel are on the rise, but Ashdod remains a more affordable alternative to cities like Tel Aviv. This affordability, combined with the city's growing tech scene, is sparking interest in Ashdod's real estate market.
For those considering a move, Ashdod offers a unique blend of opportunity and lifestyle. The city's strategic investments in tech are not just about business; they're about building a community where innovation thrives. This makes Ashdod an attractive option for anyone looking to be part of a dynamic and forward-thinking environment.
As the tech industry continues to grow, so does the demand for housing, making Ashdod a city to watch. With its combination of affordability, opportunity, and quality of life, it's no wonder that more people are choosing to call Ashdod home.
Sources: No Camels, Semerenko Group, Container News
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.