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What is happening in Israel’s real estate market? Are prices soaring or stabilizing? Is Tel Aviv still the go-to destination for international investors? How are government policies shaping real estate taxes and regulations in 2025?
These are the questions we hear daily from industry experts, potential buyers, and sellers across the country, from Jerusalem to Haifa and beyond. You might be curious about these topics too.
We understand this because we maintain close connections with local professionals and individuals like you, exploring the Israeli real estate market every day. That’s why we crafted this article: to deliver clear answers, insightful analysis, and a comprehensive view of market trends and dynamics.
Our aim is straightforward: to make sure you feel informed and confident about the market without needing to search elsewhere. If you think we missed something or could improve, we’d love to hear your feedback. Feel free to message us with your thoughts, and we’ll strive to enhance this content for you.
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1) Property prices in northern Israel will rise moderately with improved transportation links
The northern region of Israel is buzzing with new transportation developments that are set to boost property prices.
With a $14 billion investment from the government, the area is seeing major upgrades in public transit and road networks. One standout project is the high-speed rail line connecting Kiryat Shmona to Eilat, which will significantly enhance connectivity in the north.
Another exciting development is the light rail system between Haifa and Nazareth. This 41 km line, featuring 20 stations, is expected to transport 120,000 passengers daily and cut commute times by about 40%. Such improvements are making the northern region more attractive to both residents and commuters, likely pushing property prices up.
In the Haifa area, there's already been a 108% jump in new apartment purchases from late 2023 to mid-2024, thanks in part to these transportation upgrades. Real estate experts are predicting moderate price increases in areas with better transport links, with the Northern district seeing a 4.7% growth in house prices.
These changes are not just about convenience; they’re reshaping the real estate landscape. Improved accessibility is a game-changer, making the north a hot spot for potential buyers.
Sources: The Media Line, Alstom, Globes, Global Property Guide
2) Tel Aviv rents will keep rising due to high demand and limited supply
Rents in Tel Aviv are climbing and show no signs of slowing down.
From the second quarter of 2023 to the same period in 2024, average monthly rent jumped by 4.9%, hitting NIS 7,000. Despite these rising costs, rental demand surged by 42% compared to the summer of 2023. Tel Aviv is now one of the hottest rental markets around.
The city's population is booming, thanks to high birth rates and immigration, leading to a chronic housing shortage. Young people are flocking to Tel Aviv for its lively neighborhoods and cultural vibe, keeping demand high.
On the flip side, new housing developments are scarce. The shortage of land for new construction is expected to last until 2025, limiting new housing options. Slow construction and red tape only add to the problem, making it tough to meet the demand in central areas.
Sources: The Jerusalem Post, Globes English, Semerenko Group
We made this infographic to show you how property prices in Israel compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
3) Jerusalem's rental yields will stay stable due to the city's unique market dynamics balancing supply and demand
Jerusalem's rental market is uniquely stable, thanks to its distinct dynamics that balance supply and demand.
Rental prices in Jerusalem have been on a steady rise, with the average cost for a 2.5 to 3-room apartment climbing from 4,435 ILS in December 2023 to 4,485 ILS in March 2024. This increase highlights a consistent demand for rental properties, making it a reliable market for potential investors.
Jerusalem's allure as a cultural and religious center draws millions of tourists and pilgrims annually, creating a constant need for rental accommodations. This influx of visitors ensures that rental properties are always in demand, contributing to the market's stability.
The city's limited land availability for new construction means that existing properties are highly sought after, which helps keep rental prices stable. This scarcity of land ensures that new developments are carefully managed, preventing an oversupply that could disrupt the market.
Government regulations are also key in maintaining this balance. Policies are designed to protect the city's heritage while allowing for controlled development, ensuring that new constructions don't flood the market and destabilize rental yields.
Historically, Jerusalem's rental yields have been more stable compared to other major Israeli cities, with average gross rental yields consistently around 2.5% to 3.5% annually. This consistency makes it an attractive option for those looking to invest in real estate.
Sources: CEIC Data, Genesis Estates, Israel Property Blog
4) Government incentives will draw more investors to the Negev region
The Negev region is becoming a hot spot for investors, thanks to generous government incentives and smart development plans.
In recent years, the Israeli government has poured money into the Negev, including $15 million for expanding Ben-Gurion University. This is part of a larger $250 million initiative to move IDF technology units there, which is expected to give the local economy a big boost and attract new businesses.
The housing market in the Negev is on fire, with new apartment sales jumping 85% in May 2024 compared to the previous year. This rise in property values, along with tax breaks, is making investors more eager to buy than sell, showing a clear shift in how they view the region.
Blueprint Negev is a game-changer, aiming to turn the area into a major economic hub by upgrading transportation and building new schools and hospitals. The goal is to bring in 500,000 new residents, which would further enhance the region's economic prospects.
With strategic development plans and increased media buzz, the Negev is catching the eye of international investors. The government's investor-friendly policies are a big part of why this region is now seen as an investment hotspot.
Sources: Americans for BGU, Globes, Wikipedia
5) Virtual reality will become more important in property viewings, particularly for foreign buyers
Virtual reality is revolutionizing real estate, especially for those buying from abroad.
In recent years, 77% of potential buyers have turned to VR for remote property tours, making it a must-have tool for exploring homes without stepping foot in them. This is particularly true in Israel, where foreign investment in real estate has surged by 40% in 2023. With so many international buyers, the need for easy and effective property viewing methods has never been greater.
Virtual tours are the perfect answer, letting buyers dive into the details of a home and get a real feel for its layout. In fact, 65% of homeowners say VR tours enhance their understanding of a property. This tech isn't just a fancy add-on; it's becoming a standard part of the buying process.
Thanks to advancements in VR, the technology is now more accessible and affordable than ever. The cost of VR headsets has dropped, and sales are climbing, bringing this once-niche tech to a wider audience. In Israel, real estate agencies are jumping on board, offering 3D virtual tours as a standard service. This approach not only attracts more buyers but also helps in reducing price negotiations by giving a clear picture of what’s on offer.
Sources: Immo Israel, Jerusalem Post, Numalis, LandVault
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6) Property values in some beachfront areas will be affected by coastal erosion and climate change concerns
In Israel, sea levels have risen by more than 10 cm from 2023 to 2024, and this trend is expected to continue.
Along the Mediterranean coast, storm surges can raise sea levels by 40-50 cm, causing significant coastal erosion. This isn't just a future worry; it's happening now in places like Ashdod Beach and Tel Aviv Promenade Beach. Locals have noticed changes, and studies predict even more flooding and landscape shifts.
With these environmental shifts, insurance companies are hiking premiums for properties in high-risk coastal zones. This is a direct response to the increased risks from rising sea levels and frequent storms. If you're considering buying property, it's crucial to factor in these potential costs.
Real estate market analyses reveal that property values are declining in areas hit by coastal erosion. This makes these properties less appealing to both buyers and investors. It's a trend that's reshaping the market, especially in beachfront areas.
For those eyeing coastal properties, it's essential to understand that climate change concerns are impacting property values. The allure of beachfront living comes with its set of challenges, and these environmental factors are becoming a significant part of the equation.
As the situation evolves, staying informed about these changes is key. Coastal erosion and climate change concerns will impact property values in certain beachfront areas, so it's wise to keep an eye on how these factors might affect your investment.
Sources: Jerusalem Post, World Economic Forum
7) Remote work will boost demand for homes with dedicated office spaces
In 2023 and 2024, remote work became a norm, changing how we think about home spaces.
With more people working from home, 82% of remote workers now prefer their homes as their main office, according to a Pumble survey. This shift has made having a dedicated office space at home more important than ever.
Real estate markets are catching on, with listings now highlighting extra rooms and larger square footage as key features. In Israel, real estate agents report a noticeable uptick in clients seeking homes with office spaces.
The demand for home office furniture is also on the rise. In Israel, the market for these items is expected to grow by 2.00% annually from 2024 to 2025. People are investing in ergonomic chairs and adjustable desks to create comfortable work environments.
Home renovations are booming as well, with many projects focused on creating dedicated office spaces. This trend reflects a broader desire for a better work-life balance.
Sources: Statista, Statista, Pumble
8) Interest in properties with shared amenities will grow due to the desire for community-oriented living
Community-oriented living is on the rise, and it's changing how people think about buying property.
In Israel, there's a growing trend towards co-housing and communal living projects. Take Halomot Arnona CHI, for instance, Israel's first permanent affordable senior co-housing project. This place is all about private homes with shared spaces like a salon, kitchen, and garden, which help reduce loneliness and promote a healthier lifestyle for retirees.
Jerusalem is also seeing a boom in residential complexes with shared amenities. These places come with gyms, pools, and community centers, designed to encourage social interaction and build a strong sense of community. People living in these complexes often report higher satisfaction and a stronger community feeling than those in traditional single-family homes.
Kibbutz-style living is still popular in Israel, offering shared facilities like communal dining and childcare. These setups are especially attractive to young families, providing a supportive environment that media often highlights for its benefits like reduced loneliness and improved well-being.
Real estate market reports frequently point out the success of properties with shared amenities. Residents in these communities tend to feel more connected and satisfied, which is a big draw for potential buyers.
As more people look for ways to connect with others, the demand for properties with shared amenities is likely to keep growing. This trend is reshaping the real estate landscape, making community-oriented living a key factor for many buyers.
Sources: Jerusalem Post, Capitil Real Estate, Jerusalem Post
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Israel. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
9) Israel will see rising demand for retirement-friendly housing due to its aging population
In Israel, people are living longer than ever before.
With life expectancy on the rise, more folks are hitting the age of 65 and beyond. Back in 2020, the average life expectancy was 83.5 years, and this trend is still going strong. This means a larger chunk of the population is getting older, which naturally boosts the need for housing that suits their needs. By 2024, 12% of the population was over 65, and by 2035, it's expected to be nearly 14%, or over 1.6 million people.
This growing number of older adults is driving up demand for retirement-friendly housing options. The government is aware of this demographic shift and sees it as a big challenge. They're gearing up to tweak public services, including housing, to better cater to the elderly. This means more focus on creating spaces that are not just accessible but also comfortable for seniors.
Developers are already on it, with projects like those by the Azrieli Group leading the way. These modern retirement residences come with amenities like spas and swimming pools, showing that older adults want more than just a place to live—they want a lifestyle. The significant investment in these facilities highlights a strong market demand for senior living options.
Insider tip: the Azrieli Group's projects are setting a new standard for what retirement living can look like in Israel. They're not just building homes; they're creating communities where seniors can thrive. This is a clear sign that the market is evolving to meet the needs of an aging population.
So, if you're considering buying property in Israel, keep an eye on these trends. The demand for retirement-friendly housing is only going to grow, making it a potentially smart investment. Understanding these shifts can give you an edge in the real estate market.
Sources: Jewish Virtual Library, Central Bureau of Statistics, The Jerusalem Post
10) Israeli buyers' growing environmental awareness will boost demand for eco-friendly homes
In Israel, home construction has taken a green turn with the introduction of the Israeli Sustainable Building Standard in 2023.
This standard, now mandatory for most new buildings, focuses on reducing environmental impact, from energy use to waste management, setting the stage for more eco-friendly homes.
Companies like Criaterra Innovations are leading the charge by offering sustainable building materials that save energy and cut CO2 emissions, showing a growing market for eco-friendly construction solutions.
Consumer preferences are shifting too. The 2024 Sustainability Report by the National Association of REALTORS highlights that nearly half of the respondents noticed a client interest in sustainability, reflecting a broader societal move towards eco-conscious living.
The Israeli government is also playing a key role by promoting eco-friendly home construction. With a commitment to significantly reduce greenhouse gas emissions by 2050, they’ve introduced incentives to encourage sustainable building practices.
All these factors combined are driving the demand for eco-friendly homes, as environmental awareness grows among Israeli buyers.
Sources: OECD Environmental Performance Reviews: Israel 2023, Israeli startup creates sustainable building materials that return to dust, Unveiling the Greener Future: Insights from the 2024 Sustainability Survey Residential
11) Demand for larger family homes will rise in certain neighborhoods due to the growing ultra-Orthodox population
The ultra-Orthodox community in Israel has a remarkably high birth rate, leading to larger families.
By 2030, the ultra-Orthodox are expected to make up 16% of Israel's population, and by 2033, their numbers could hit two million. This rapid growth means there's a rising demand for bigger homes in neighborhoods where these communities thrive.
Ultra-Orthodox families often buy smaller apartments, with a median size of 80 square meters, compared to 97 square meters for other Jewish families. Despite the smaller size, they manage with an average of 3.7 rooms per home, showing their knack for making the most of available space.
Beit Shemesh is a hotspot for ultra-Orthodox homebuyers, with 8,602 apartments purchased between 2018 and 2021. Jerusalem and Bnei Brak are also popular, with 8,414 and 5,663 purchases respectively, underscoring the preference for areas with strong community ties.
These neighborhoods offer more than just housing; they provide a sense of belonging and access to community resources. The ultra-Orthodox population's growth is not just about numbers; it's about creating spaces that support their way of life.
As the ultra-Orthodox community continues to expand, the demand for larger family homes in specific neighborhoods will only increase. This trend is driven by their unique lifestyle needs and the desire to live in areas with established community support.
Sources: IDI, Buy It In Israel, JPost, IDI Report
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12) Jerusalem’s residential market will shift towards western neighborhoods with improved connectivity from infrastructure projects
Jerusalem's residential market is shifting towards the western neighborhoods thanks to new transportation links.
The completion of the Jerusalem Light Rail extension, especially the Red Line, has made a big impact. Some areas have seen property prices surge by up to 172% over a decade, making them hot spots for buyers.
With a NIS 500 million investment from the Israeli government, infrastructure projects are enhancing connectivity in these western areas. This focus on transportation and accessibility is making them more attractive to homeowners and investors.
In 2024, real estate reports showed a rise in transactions in central and historic parts of Jerusalem, including western neighborhoods like Rehavia and Talbiya. These areas are now drawing in luxury buyers, pushing property values even higher.
The Jerusalem Gateway Project is another game-changer, expected to create 60,000 new jobs. This will boost the commercial and cultural appeal of these neighborhoods, making them even more desirable.
As these infrastructure projects continue, the western neighborhoods are set to become the new focal point for Jerusalem's residential market, offering both modern amenities and historic charm.
Source: Jerusalem Post
13) Property demand in Ashdod will surge as port expansion enhances local job opportunities
The recent expansion of Ashdod Port has significantly boosted local employment.
With the port's growth, job listings in port-related activities have surged, drawing more people to the area. This expansion has not only doubled the port's profits but also set a record for handling standard cargo containers, known as TEUs. As a result, the local job market is thriving, and this trend is expected to continue.
Investments in local infrastructure are on the rise, with the construction of a new rail terminal at Eitan Port enhancing connectivity to nearby industrial hubs. This development is a magnet for further investments, making Ashdod increasingly appealing to both businesses and residents.
The area around Ashdod Port is becoming a hotspot for new businesses and industries. Already home to bonded warehouses and cold storage facilities, the port's vicinity is evolving into a bustling business environment. This growth is likely to attract more companies, boosting local employment opportunities and driving up property demand.
As more industries set up shop near the port, the demand for housing is expected to rise. The influx of workers and businesses will likely lead to a surge in property interest, making Ashdod a prime location for real estate investment.
With the port's expansion, Ashdod is poised for a transformation, becoming a vibrant hub of economic activity. The increased employment opportunities and business growth are key factors that will drive the local property market.
Sources: Port Technology, Logistics Cluster
14) Be'er Sheva will attract student housing investments as Ben-Gurion University expands
Be'er Sheva is quickly becoming a hotspot for student housing investments thanks to the expansion of Ben-Gurion University.
With the university planning to increase its student body by 10% annually, the demand for housing is naturally on the rise. This growth is not just about numbers; it's about the university's expanding academic offerings, like the new engineering faculty, which is drawing even more students to the city.
Neighborhoods such as Beth, Gimel, and Dalet are seeing a surge in rental activity due to their proximity to the university. These areas are buzzing with real estate transactions, making them prime targets for investors looking to capitalize on the student influx.
Investors are particularly interested because rental yields in Be'er Sheva can reach up to 9% in student-focused areas, which is higher than in many other Israeli cities. This makes the city an attractive option for those seeking high returns on their investments.
Demographic studies back this up, showing a steady increase in the student population, which ensures a consistent demand for housing. This trend is a win-win for both students in need of accommodation and investors looking for profitable opportunities.
For those considering a real estate investment, Be'er Sheva offers a unique opportunity to tap into a thriving market driven by educational growth. The city's transformation into a student hub is not just a trend; it's a strategic shift that promises long-term benefits.
Sources: Genesis Estates, Immo Israel, Ben-Gurion University
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.