After a difficult year in 2025, experts are cautiously optimistic about 2026, predicting a gradual recovery of the market, which will proceed differently in different regions of the country.
Last year, the market slowed down due to the two-year war in Gaza, high interest rates and a record volume of unsold homes. In 2026, Israel hopes for an economic recovery after the cease-fire, renewed demand and lower rates. However, the strengthening of the shekel to a 30-year high reduces the interest of foreign buyers, and in some areas supply exceeds demand.
A record number of new apartments and houses are currently on sale - 86,000. A strong shekel (about 3.11 per dollar) deters foreigners, and the interest rate remains high at 4%, although it is expected to decrease to 3.25% by the end of the year.
"At the moment, not many buyers have returned to the market, so customers still have the opportunity to bargain," says Shirley Werner of Remax Ocean Realty. "But when the situation improves," and I believe it will happen in 2026, "the advantage will shift back to sellers."
According to official data, housing prices declined during 8 of the 12 months of 2025. Year-on-year growth was only 0.4%, although the year started at 7.8%. At the same time, the situation varies greatly by city: in Jerusalem, prices increased by 9.6%, while in Tel Aviv they fell by 1.9%.
Jerusalem
"In Jerusalem, prices will continue to rise faster than inflation because demand will always exceed supply," says Nahi Paris, owner of Nachi Realty. "Every Orthodox Jew in the world who can afford it wants to have an apartment here."According to him, even large-scale construction does not meet the demand. However, advantageous offers can be found in the outlying areas: in Har Homa, a young couple can buy a two-bedroom apartment for 2.4 million shekels ($777,000), which is considered affordable for Jerusalem.
Tel Aviv
There is an oversupply of new luxury homes in Tel Aviv, and developers are forced to lower prices. According to Werner, the fear of overpaying has replaced the fear of missing an opportunity: "It's better to wait until the market bottoms out."
Many developers offer non-public discounts, and prices have already dropped by 15-20% in some areas. At the same time, the truce and lower rates have changed the mood: buyers are trying to catch up before prices start to rise again.
Source: Times of Israel
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