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The ongoing conflict has significantly impacted Tel Aviv's property market, with apartment prices dropping 8% since the war began. While central Tel Aviv still commands approximately ILS 68,297 per square meter as of September 2025, the market presents both opportunities and risks for potential buyers.
The Tel Aviv residential market is experiencing heightened volatility, with foreign buyer demand declining sharply while rental yields remain stable at 3.1-3.3%. Properties with bomb shelters command premium prices, and the time to resell has increased by 40-60% compared to pre-war periods.
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Tel Aviv property prices have dropped 8% since the war began, with central areas averaging ILS 68,297 per square meter as of September 2025.
Foreign buyer demand has declined significantly, resale times have increased by 40-60%, but rental yields remain stable at 3.1-3.3% annually.
| Market Metric | Current Status (Sep 2025) | Change Since War Began |
|---|---|---|
| Average Price per sqm (Central Tel Aviv) | ILS 68,297 (~$18,469) | -8% from March 2024 peak |
| Rental Yields (Gross) | 3.1% - 3.3% | Stable |
| Airbnb Occupancy Rate | 55% | Down from pre-war levels |
| Average Resale Time | 6-9 months | +40-60% increase |
| Foreign Buyer Interest | Significantly reduced | Sharp decline in EU/Asian buyers |
| Mortgage Interest (Foreigners) | 4-6% variable | Stricter requirements |
| Properties with Bomb Shelters | Premium pricing | 10-20% price advantage |
What's the current average price per square meter for apartments in central Tel Aviv compared to last year?
Central Tel Aviv apartment prices currently average ILS 68,297 per square meter (approximately $18,469) as of September 2025.
This represents an 8% decline from the March 2024 peak when the average apartment price reached ILS 4.61 million compared to ILS 4.21 million in June 2025. The price drop has been more pronounced for second-hand apartments, which are down approximately 18% from late 2022 levels.
Prime locations within central Tel Aviv command significantly higher prices, with luxury segments and penthouses experiencing even steeper declines. Properties in sought-after neighborhoods like Rothschild Boulevard and the Old North continue to maintain premium pricing despite the overall market softening.
The price variations depend heavily on building age, presence of bomb shelters (mamad), and exact location within central Tel Aviv. Properties with modern safety features maintain stronger pricing power in the current market environment.
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How much have property prices in Tel Aviv dropped since the war began?
Tel Aviv property prices have fallen by 8% on average since the war escalation began, with the main decline occurring from mid-2024 onwards.
The price drop varies significantly by property type and location. Luxury penthouses and properties without bomb shelters have experienced the most substantial decreases, often exceeding the 8% average. Second-hand apartments show a more dramatic 18% decline from their late 2022 peaks.
The market has become increasingly negotiable, with larger gaps between initial asking prices and final sale prices. Sellers are more willing to accept lower offers, and properties that previously sold quickly at asking price now require significant price reductions to attract buyers.
Properties in perceived higher-risk areas or older buildings without reinforced rooms face discounts of 10-20% compared to similar properties with modern safety features. The premium for bomb shelter-equipped apartments has become a defining factor in current pricing strategies.
Market experts note that while the decline is significant, it follows patterns seen in previous conflict periods in Israel, suggesting potential for recovery once stability returns.
What are the current rental yields in Tel Aviv compared to other Israeli cities?
Tel Aviv rental yields currently range between 3.1% and 3.3% gross annually, remaining relatively stable despite the war's impact on property prices.
| City | Long-term Rental Yield | Short-term (Airbnb) Yield |
|---|---|---|
| Tel Aviv | 3.1% - 3.3% | 3.2% - 3.5% |
| Jerusalem | 3.4% - 3.6% | 3.3% - 3.7% |
| Haifa | 3.6% - 3.8% | 3.4% - 3.8% |
| Beer Sheva | 4.1% - 4.4% | 3.8% - 4.2% |
| Netanya | 3.8% - 4.1% | 3.6% - 4.0% |
What is the current occupancy rate for rentals in Tel Aviv during the war?
Short-term rental occupancy rates in Tel Aviv currently average 55%, representing a significant decline from pre-war levels.
Airbnb properties generate an average daily rate of ₪624 (approximately $164), resulting in annual revenue of around ₪120,544 ($31,639) for typical properties. However, these figures reflect the reduced tourism and business travel due to the ongoing conflict.
Long-term rental occupancy remains more stable, with demand from displaced residents and military personnel partially offsetting the decline in international tenants. The Tel Aviv long-term rental market benefits from its status as Israel's economic center, maintaining steady demand despite wartime conditions.
Seasonal fluctuations have become more pronounced, with summer months showing better performance than winter periods. Properties in northern and central Tel Aviv maintain higher occupancy rates compared to southern areas perceived as higher risk.
Rental properties with bomb shelters command both higher occupancy rates and premium pricing, reflecting tenant priorities for safety during the conflict.
How easy is it to secure a mortgage for foreign buyers in Tel Aviv right now?
Securing mortgages for foreign buyers in Tel Aviv has become more challenging during the war, with Israeli banks implementing stricter requirements and more cautious lending practices.
Foreign investors face interest rates of 4-6% variable, significantly higher than rates offered to Israeli residents. Most banks now require down payments of 30-40% minimum, up from the previous 20-25% requirements for qualified foreign buyers.
The approval process has lengthened, with banks conducting more thorough due diligence on foreign applicants and their income sources. Documentation requirements have increased, and banks are more selective about which foreign buyers they approve for financing.
European and North American buyers generally find the process easier than investors from other regions, due to established banking relationships and perceived lower risk profiles. Cash buyers maintain significant advantages in the current market environment.
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Are there new government incentives or restrictions for buying property in Tel Aviv due to the war?
As of September 2025, the Israeli government has not introduced new buyer incentives specifically targeting the Tel Aviv property market due to the war.
The government's focus remains on rebuilding damaged areas and stabilizing construction activities rather than stimulating property purchases. Standard purchase tax rates, VAT, and acquisition taxes remain unchanged from pre-war levels.
No new foreign buyer restrictions have been enacted, though authorities are reportedly monitoring the situation for potential anti-speculation measures. The existing regulatory framework continues to apply to all property transactions.
Some minor relief is available through reduced local council taxes (arnona) for properties with documented bomb damage, but this applies to a limited number of cases. Property insurance requirements have been reviewed but not substantially changed.
Market participants expect potential government intervention if property prices decline further or if foreign speculation increases significantly once the conflict stabilizes.
How has foreign buyer demand shifted since the war started?
Foreign buyer demand in Tel Aviv has declined sharply since the war began, with significant variations by nationality and buyer profile.
American, French, and Russian buyers have shown the most resilience, continuing to make selective purchases despite the conflict. These buyers often have existing connections to Israel or view the current situation as a buying opportunity.
UK and East Asian buyer interest has almost completely disappeared, with these markets showing extreme risk aversion to conflict zones. European Union investors are largely "waiting out" the war, leading to a substantial reduction in cash buyers from these regions.
The decline in foreign demand has reduced competition for properties, giving remaining buyers more negotiating power and access to better deals. However, this has also contributed to longer selling times and increased market uncertainty.
Many foreign buyers who remain active are focusing on properties with enhanced security features and established rental income streams to mitigate perceived risks.
What areas of Tel Aviv are considered safest and how does this impact property values?
Northern and central Tel Aviv neighborhoods, particularly Ramat Aviv, Old North, and parts of the Rothschild area, are perceived as the safest locations during the conflict.
Properties in these areas maintain premium pricing, especially buildings with modern bomb shelters (mamad). The presence of reinforced rooms has become a critical factor in buyer decision-making, with properties lacking these features facing significant discounts.
Coastal, southern, and less developed neighborhoods experience higher risk perception, resulting in price discounts of 10-20% compared to similar properties in perceived safer areas. Buildings constructed before modern safety standards face particular challenges in maintaining value.
The Tel Aviv municipality has designated certain areas as higher priority for emergency services, and properties in these zones maintain stronger market performance. Proximity to bomb shelters and emergency facilities has become a key valuation factor.
Market data shows that properties with modern safety features command premiums of 15-25% over comparable units without these amenities, a significant increase from pre-war valuations.
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What are the additional costs of buying an apartment in Tel Aviv right now?
Total additional costs for purchasing an apartment in Tel Aviv currently range from 10-15% above the property price, with some increases during the war period.
Purchase tax for foreign buyers ranges from 5-8% depending on property value, while Israeli residents pay lower rates. Agent commissions typically range from 1-2% of the purchase price, and legal fees add another 0.5-1.5%.
Property insurance premiums have increased moderately during the war, particularly for coverage against property damage and civil unrest. Mandatory building insurance and municipal taxes remain at pre-war levels.
Renovation costs have increased due to material shortages and increased demand for security upgrades. Many buyers invest additional funds in bomb shelter improvements or reinforced room installations.
Banking and mortgage fees have remained stable, though foreign buyers face higher processing costs and stricter documentation requirements that can add to overall transaction expenses.
How liquid is the Tel Aviv property market compared to before the war?
The Tel Aviv property market has become significantly less liquid during the war, with average resale times increasing by 40-60% compared to pre-war periods.
Standard apartments now take 6-9 months to sell, compared to the previous 3-4 month average. Properties without modern safety features or in perceived higher-risk areas face even longer marketing periods.
Discounted "urgent sale" listings have become more common, particularly in affected neighborhoods where sellers need quick exits. These properties often trade at 10-15% below comparable market prices.
The reduced number of active buyers means properties compete more intensively for attention, requiring more aggressive pricing strategies and marketing efforts. Cash sales complete faster than financed purchases due to simplified approval processes.
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What are the realistic short-term risks of buying in Tel Aviv during the war?
Potential property damage from conflict-related incidents represents the most immediate physical risk for Tel Aviv property buyers.
Decreased rental demand and forced vacancy periods pose significant financial risks, particularly for investment properties dependent on tourism or international business travelers. Short-term rental properties face the highest exposure to income volatility.
Insurance claim disputes and delayed processing have become more common, with providers sometimes slow to respond to war-related damage claims. Coverage gaps and policy exclusions require careful review before purchase.
Market liquidity risks mean properties may be difficult to resell quickly if personal circumstances change or if the conflict escalates. Buyers should prepare for potentially extended ownership periods.
Currency fluctuation risks affect foreign buyers, as the Israeli shekel's volatility during wartime can impact both purchase costs and future returns when converted to home currencies.
What are the long-term growth forecasts for Tel Aviv property once the conflict stabilizes?
Market experts anticipate a strong rebound in Tel Aviv property values following conflict resolution, based on historical Israeli recovery patterns from previous wars.
Tel Aviv's fundamental economic drivers remain intact, including its position as Israel's technology and financial center, continued population growth, and severely limited buildable land supply. These factors support long-term price appreciation once market confidence returns.
Historical data from previous Israeli conflicts shows sharp price increases typically occur 12-24 months after conflict resolution, as pent-up demand returns and construction delays constrain supply. The 2006 Lebanon War and Gaza conflicts showed similar recovery patterns.
The technology sector's resilience and Tel Aviv's startup ecosystem provide economic stability that should drive future property demand. International business investment typically returns quickly once security concerns diminish.
Conservative forecasts suggest 15-25% price appreciation in the 2-3 years following conflict stabilization, though this depends heavily on the duration and ultimate resolution of current hostilities.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Buying property in Tel Aviv during wartime presents both significant risks and potential opportunities for informed investors.
While current prices are down 8% and market liquidity has decreased, the city's strong economic fundamentals suggest potential for substantial gains once the conflict stabilizes.
Sources
- Average Price Per Square Meter Tel Aviv
- Globes - Tel Aviv Home Prices Falling Sharply
- Airbtics - Annual Airbnb Revenue Tel Aviv
- Average Rental Yield Tel Aviv
- Times of Israel - Housing Snapshot August 2025
- Deloitte Property Index
- Native Israel - Tel Aviv Real Estate
- Welcome Israel - Property Market 2025