Prices down 1.8%: the real decline is elsewhere

Prices are falling in Israel: the news is spreading through every community, from Los Angeles to London to Strasbourg or Saint Petersburg. But by how much, exactly? According to the Central Bureau of Statistics (CBS), -1.8% year-on-year. According to agents, economists, and Ministry of Finance figures, the reality is more nuanced, and the real decline may lie elsewhere. Amounts converted at approximately 3.11 NIS to 1 USD.

-1.8% year-on-year, but +26.8% over five years

According to the Times of Israel of October 30, average prices fell 0.6% between May-June and July-August 2026, and 1.8% year-on-year. They declined in 7 of the last 12 months. But over the longer period, the picture is reversed: since July-August 2021, average prices have risen 26.8% (+24.3% for new homes). Since October 7, 2023, the increase has been about 7%. Over the long term, the paper notes that prices have more than tripled since the mid-2000s and risen about 230% since 2007.

In other words, the current correction is real but modest compared to the previous rise. The average price of a home in Tel Aviv, 3.58 million NIS (about 1.15 million USD) in May-June according to the CBS, has not collapsed.

In real terms: -4.5% according to one economist

Adjusted for inflation, the decline looks steeper. Economist David Genesove, quoted by the Times of Israel, estimates the inflation-adjusted decline at about 4.5%. Caution is warranted on this figure: the annual inflation rate published by the Bank of Israel for September is 1.6%, and a simple subtraction of -1.8% and 1.6% would give about -3.4%. This discrepancy is not explained in the article, which does not specify the methodology. The message remains the same: in purchasing power terms, prices are lower than a year ago.

The decline that statistics don't capture

CBS indices measure the signed price. Yet agents quoted by the Times of Israel claim that some developers have quietly cut their prices by 10% or more. Eran Rolls, who heads the Israel Building Center, estimates that perks such as financing or better finishes can be worth about 10% of the price. In June, the Jerusalem Post reported incentives of around 5% of the price among builders.

Data from the Ministry of Finance's chief economist, relayed by Buyitinisrael, confirm the rise of these perks: financing benefits were involved in 20% of sales in five tracked areas in May 2026 (the lowest since November 2024) and 30% in August. On an apartment listed at 3 million NIS (about 965,000 USD), a 10% benefit amounts to 300,000 NIS, or about 96,000 USD, a sum that appears in no index.

85,000 new homes awaiting buyers

What is pushing developers to negotiate is inventory. The CBS counts more than 85,000 new homes for sale, at various stages of construction, equivalent to about two and a half years of sales at the current pace, according to the Times of Israel. Buyitinisrael specifies: about 85,680 units as of the end of August, or 26.7 months of sales. About 55% are located in Tel Aviv and the Center, and about 10,000 (12%) in Jerusalem. Among the largest stocks of unsold new homes are also Bat Yam (about 4,990), Haifa, Ramat Gan, Netanya, Lod, and Kiryat Gat.

These figures are disputed. Dani Ben Shahar urges caution: the way available homes are counted is debatable, and part of the stock corresponds to pre-sales. He also notes that resale sellers resist cutting listed prices, which keeps prices propped up.

Who benefits from this situation?

Eran Rolls claims that the State collects roughly half to two-thirds of the price of a new home through land sales, VAT, and transaction taxes: this is his estimate, not an official statistic. He also links short-term demand to buyers from abroad, citing antisemitism as one of the drivers. Dani Ben Shahar reminds us that bubbles are only recognized after they burst. The most sensible approach, then, is to buy according to one's needs and budget, while negotiating, rather than betting on a market bottom.

Interest rates: a pause, not a turning point

On October 21, the Bank of Israel kept its benchmark rate at 3.25%, with a prime rate of 4.75%. Inflation stands at 1.6% and unemployment at 3.3%. The bank's research department forecasts an average rate of about 3% in the third quarter of 2027, while the market and private analysts expect 3.1%. The next decision is due on November 23. On the credit side, new mortgages reached 9.7 billion NIS in May (about 3.1 billion USD), up 19% year-on-year, according to Bank of Israel data relayed by the Jerusalem Post.

How to read these figures when buying from abroad

For a diaspora buyer, three practical conclusions stand out. Always compare the net price, after financing perks and finishes, rather than the listed price. Ask the developer about the delivery date, since the stock includes many pre-sales. And keep the exchange rate in mind: with the shekel around 3.10 to 3.11 per 1 USD, after a 30-year peak in May according to the Times of Israel, the dollar cost of the same property has shifted within a few months. Our ultimate guide to real estate in Israel details the steps of a purchase.

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