Market outlook · Israel · Issued 8 October 2026

Where Israeli property prices go next: a floor this winter, a slow climb in 2027

Prices have been falling since late 2024, but the fall is getting smaller. Our central case is that prices stop falling over the winter and rise by about 2.5% in 2027. The rise will be uneven, and the stock of unsold new apartments will keep it slow.

−1.2%Prices, on a year agoCBS, June–July 2026. The fall peaked at −2.0% in April–May.
3.25%Bank of Israel rateThree cuts since May. The Bank expects about 3% by mid-2027.
84,280Unsold new apartmentsAbout 26 months of supply, mostly in Tel Aviv and Centre districts.
+2.5%Our call for 2027Range −2.0% to +5.0%. 2026 itself: about flat.
The call

Prices stop falling over the winter and rise slowly through 2027

In one sentenceCheaper money and rising rents will put a floor under prices, but 84,000 unsold new apartments will keep the climb slow.

This is not a call for a boom, and it is not a call for a crash. In the five years to mid-2026, Israeli prices rose about 31% while consumer prices rose about 17%. A market that has gained that much and is now falling by about 1% a year is adjusting, not collapsing. What decides the next year is whether cheaper mortgages bring buyers back faster than developers can clear their stock. We think they will, slowly.

Annual change in Israeli home prices, and our two callsCBS · TAPI forecast
−4%0+4%+8%+12%+16%2021: +13.1% (CBS, Q4 on Q4)+13.1%20212022: +14.7% (CBS, Q4 on Q4)+14.7%20222023: −1.0% (CBS, Q4 on Q4)−1.0%20232024: +7.7% (CBS, Q4 on Q4)+7.7%20242025: −1.0% (CBS, Q4 on Q4)−1.0%20252026 TAPI forecast: −0.3% (range −1.8% to +0.8%)−0.3%forecast20262027 TAPI forecast: +2.5% (range −2.0% to +5.0%)+2.5%forecast2027OUR CALL →← CBS, FOURTH QUARTER ON FOURTH QUARTER
−4%0+4%+8%+12%+16%2021: +13.1% (CBS, Q4 on Q4)+13%’212022: +14.7% (CBS, Q4 on Q4)+15%’222023: −1.0% (CBS, Q4 on Q4)−1.0%’232024: +7.7% (CBS, Q4 on Q4)+7.7%’242025: −1.0% (CBS, Q4 on Q4)−1.0%’252026 TAPI forecast: −0.3% (range −1.8% to +0.8%)−0.3%fcst’262027 TAPI forecast: +2.5% (range −2.0% to +5.0%)+2.5%fcst’27OURS →← CBS, Q4 ON Q4
Actual, fourth quarter on fourth quarterOur forecast (whisker = range)

2021–2025 are CBS annual changes, fourth quarter on fourth quarter. 2026 and 2027 are TAPI forecasts on the same basis.

The turn

The fall is getting smaller, two readings running

The annual decline was deepest in the April–May reading, at −2.0%, during the confrontation with Iran. Since then it has narrowed to −1.5% and then −1.2%. In the latest two months Tel Aviv district rose 0.7%, the biggest gain of any district. Two readings are not a trend. But the direction has changed, and none of the Bank of Israel's rate cuts since May has fully reached the index yet.

2026 so far, and our forecast range to December 2027Annual change · CBS · TAPI
−4%−2%0+2%+4%+6%Jan 2026Jul 2026Jan 2027Jul 2027Jan 2028FORECASTFeb–Mar 2026: −1.2% on a year earlier (CBS)Mar–Apr 2026: −1.3% on a year earlier (CBS)Apr–May 2026: −2.0% on a year earlier (CBS)May–Jun 2026: −1.5% on a year earlier (CBS)Jun–Jul 2026: −1.2% on a year earlier (CBS)low point −2.0%latest −1.2%Dec 2026: our central case −0.3%, range −1.8% to +0.8%Jul 2027: our central case +1.3%, range −2.5% to +3.2%Dec 2027: our central case +2.5%, range −2.0% to +5.0%Upside +5.0%Central +2.5%Downside −2.0%
−4%−2%0+2%+4%+6%Jan 26Jan 27Jan 28FORECASTFeb–Mar 2026: −1.2% on a year earlier (CBS)Mar–Apr 2026: −1.3% on a year earlier (CBS)Apr–May 2026: −2.0% on a year earlier (CBS)May–Jun 2026: −1.5% on a year earlier (CBS)Jun–Jul 2026: −1.2% on a year earlier (CBS)low −2.0%−1.2%Dec 2026: our central case −0.3%, range −1.8% to +0.8%Jul 2027: our central case +1.3%, range −2.5% to +3.2%Dec 2027: our central case +2.5%, range −2.0% to +5.0%Upside+5.0%Central+2.5%Downside−2.0%
Actual, CBS rolling readingsOur central caseRange, downside to upside

The CBS publishes a two-month rolling index. Each reading is compared with the same two months a year earlier, so readings can be lined up but never multiplied together.

The reasons

Four forces pushing prices up, four holding them down

Each force is weighted by how much we think it will move prices over the next twelve months. Prices end up where the two sides balance. Today the upward side is a little heavier, and getting heavier with every rate cut.

↑Pushing prices upWeight

1 · Money is getting cheaper

The Bank of Israel has cut three times since May, to 3.25%, and its own staff expect about 3% by mid-2027. Each quarter-point cut lowers the monthly repayment on a typical prime-linked mortgage. Mortgage lending was already about ₪10bn in July. These cuts take three to six months to show up in prices, so most of their effect is still ahead.

Bank of Israel rateBoI · %
To Nov 2025: 4.50%4.50%To Nov 2025Spring 2026: 4.00%4.00%Spring 2026May 2026: 3.75%3.75%May 2026Jul 2026: 3.50%3.50%Jul 2026Sep 2026: 3.25%3.25%Sep 2026currentQ2 2027: 3.00% (Bank of Israel staff forecast, average)≈3.00%Q2 2027BoI forecast

2 · Rents are rising while prices fall

A new tenant pays 4.7% more than a year ago. The same flat costs 1.2% less to buy. That gap does two things. Renting gets dearer compared with owning, so more tenants try to buy. And the rental yield on a flat bought today is higher than a year ago, which draws investors back.

Twelve-month changeCBS · BoI · %
New-tenant rentsNew-tenant rents: +4.7% on a year earlier+4.7%Construction inputsConstruction inputs: +3.5% on a year earlier+3.5%Renewal rentsRenewal rents: +2.6% on a year earlier+2.6%Consumer pricesConsumer prices: +1.5% on a year earlier+1.5%Home pricesHome prices: −1.2% on a year earlier−1.2%

3 · Building costs set a floor

Construction inputs rose 3.5% in the year to July while prices fell. Developers cannot cut list prices much further without losing money on every apartment. That is why they offer financing terms rather than discounts, and why new-build prices barely fell.

4 · A strong economy and full employment

The Bank of Israel forecasts growth of 4% this year and 5.5% in 2027, with unemployment around 3%. People with secure jobs and rising pay keep buying homes. This works slowly, but it is the reason Israeli prices have never stayed down for long.

↓Holding prices downWeight

1 · 84,280 unsold new apartments

Unsold stock rose by about a third in two years and has only just stopped growing. At the current pace of sales it is about 26 months of supply. More than half of it sits in the Tel Aviv and Centre districts, the two places most buyers want, and where prices fell hardest. As long as this stock is there, prices cannot rise fast.

Unsold new apartmentsCBS · count
025k50k75k100kApr 2024Apr 2024: 65,000 unsold new apartments (approx.)≈65,000Aug 2025Aug 2025: 83,360 unsold new apartments83,360Mar 2026Mar 2026: 85,312 unsold new apartments85,312Jun 2026Jun 2026: 84,280 unsold new apartments84,280

2 · Developer promotions flatter the price

80/20 deals, interest-free periods and subsidised schemes keep headline prices up while the real price falls. In the latest reading, 41% of new-build sales were government-subsidised, up from 38%. When these deals end, part of the hidden discount will show up in the index.

3 · A strong shekel

At about ₪3.07 to the dollar, the shekel is around 10% stronger than a year ago. For buyers paying in dollars, pounds or euros, including most olim, every Israeli flat costs more than it did last year, even at the same shekel price. That weighs on the Anglo areas in particular.

4 · The second-hand market is still weak

Second-hand sales were 11% lower than a year ago in July. Investors sold more flats than they bought. Private sellers cannot match developer terms, so many are holding on rather than cutting. Their price expectations will come down only slowly.

minor significant decisive over the next twelve months
Where

Not one market: who recovers first, and who lags

The national number hides a wide spread. Jerusalem and the North are already up on a year ago. The Centre is still down more than 3%. We expect the order to change: Tel Aviv district recovers first, because it reacts fastest to cheaper money. The Centre comes last, because most of the unsold stock is there.

Latest annual change and our twelve-month range, by districtCBS · TAPI forecast
−4%−2%0+2%+4%NOW → NEXT 12 MONTHSJerusalemJerusalem: our 12-month range 0.0% to +3.0%, central +1.5%Jerusalem: +1.1% on a year earlier (CBS, June–July 2026)+1.1% → +1.5%NorthNorth: our 12-month range −0.5% to +2.5%, central +1.0%North: +1.0% on a year earlier (CBS, June–July 2026)+1.0% → +1.0%SouthSouth: our 12-month range −1.0% to +2.0%, central +0.5%South: −0.6% on a year earlier (CBS, June–July 2026)−0.6% → +0.5%Tel Aviv districtTel Aviv district: our 12-month range +0.5% to +3.5%, central +2.0%Tel Aviv district: −0.9% on a year earlier (CBS, June–July 2026)−0.9% → +2.0%HaifaHaifa: our 12-month range −2.0% to +1.5%, central 0.0%Haifa: −2.4% on a year earlier (CBS, June–July 2026)−2.4% → 0.0%CentreCentre: our 12-month range −2.5% to +1.5%, central −0.5%Centre: −3.2% on a year earlier (CBS, June–July 2026)−3.2% → −0.5%IsraelIsrael: our 12-month range −2.5% to +3.2%, central +1.3%Israel: −1.2% on a year earlier (CBS, June–July 2026)−1.2% → +1.3%
−4%0+4%NOW → 12 MOJerusalemJerusalem: our 12-month range 0.0% to +3.0%, central +1.5%Jerusalem: +1.1% on a year earlier (CBS, June–July 2026)+1.1% → +1.5%NorthNorth: our 12-month range −0.5% to +2.5%, central +1.0%North: +1.0% on a year earlier (CBS, June–July 2026)+1.0% → +1.0%SouthSouth: our 12-month range −1.0% to +2.0%, central +0.5%South: −0.6% on a year earlier (CBS, June–July 2026)−0.6% → +0.5%Tel AvivTel Aviv district: our 12-month range +0.5% to +3.5%, central +2.0%Tel Aviv district: −0.9% on a year earlier (CBS, June–July 2026)−0.9% → +2.0%HaifaHaifa: our 12-month range −2.0% to +1.5%, central 0.0%Haifa: −2.4% on a year earlier (CBS, June–July 2026)−2.4% → 0.0%CentreCentre: our 12-month range −2.5% to +1.5%, central −0.5%Centre: −3.2% on a year earlier (CBS, June–July 2026)−3.2% → −0.5%IsraelIsrael: our 12-month range −2.5% to +3.2%, central +1.3%Israel: −1.2% on a year earlier (CBS, June–July 2026)−1.2% → +1.3%
Now, on a year ago (CBS, June–July 2026)Our central caseOur range

Tel Aviv district +2.0%

The fastest to turn: already up 0.7% in the latest two months. Cheaper mortgages matter most where prices are highest. Bat Yam, Holon and Ramat Gan stock will cap the gain.

Jerusalem +1.5%

Already positive on a year ago. Steady religious and Anglo family demand, and less unsold stock than the coast relative to its size.

North +1.0%

Rebuilding after the war years. Prices are up, from a low base. Volumes are small, so expect some big swings between readings.

South +0.5%

Ashdod and Ashkelon are cheap with rail access, which supports demand. But heavy new building in Ashkelon, Ofakim and Kiryat Gat keeps supply ahead of it.

Haifa 0.0%

Down 2.4% on a year ago, with weak second-hand demand. We expect it to stabilise rather than recover within twelve months.

Centre −0.5%

The laggard. Lod, Be'er Ya'akov, Yehud and Ra'anana carry thousands of unsold units. Good for buyers, slow for sellers.

Three scenarios

How sure we are, and what would put us in each case

Downside

The stock clears on price

−2.0%2027,
national
20% likely

Developers run out of patience and cut list prices to clear stock. Second-hand sellers follow.

What would get us here
  • Rate cuts pause because inflation rises again
  • A new round of conflict hits demand
  • Developer financing tightens and forces sales
Central case · our call

A floor, then a slow climb

+2.5%2027,
national
55% likely

Prices are about flat through the winter and rise slowly from spring. Tel Aviv and Jerusalem lead and the Centre lags. Real prices, after inflation, rise only a little.

What would get us here
  • One or two more cuts, to about 3%
  • Unsold stock flat or slowly falling
  • Rents keep rising faster than inflation
Upside

A rate-cut rebound

+5.0%2027,
national
25% likely

Cheaper money and a calmer region bring buyers back all at once. Stock clears faster than expected and developers withdraw their promotions.

What would get us here
  • Rates below 3% by mid-2027
  • A durable regional settlement
  • Overseas and olim demand picks up sharply
Signposts

What would change our mind

A forecast is only useful if it says how it could be wrong. We check these every month, when each new figure is published, and change the call if they move.

The CBS annual changeToward upsideBack above zero before the end of 2026Toward downsideBack below −2.0%
Unsold new stockToward upsideBelow 80,000 by springToward downsideAbove 88,000, rising again
Bank of Israel rateToward upsideBelow 3% by the first half of 2027Toward downsideCuts paused, or a hike
Second-hand salesToward upsideBack to growth on a year agoToward downsideStill falling by more than 10% a year
Developer promotionsToward upside80/20 and interest-free offers withdrawnToward downsideOpen list-price cuts in the Centre
What it means for you

The same forecast reads differently depending on who you are

Buying a home

Your window is now, before the cuts land

Negotiating power is with buyers this winter, especially in the Centre and on new builds with long completion dates. Compare any developer offer with the price at which comparable flats actually sold, not with the list price.

Olim and overseas buyers

Watch the exchange rate as closely as the price

The strong shekel already costs you more than the recent price fall saves you. Your total cost depends on when you convert your money as much as on when you buy.

Investors

Yields are recovering

Rents are rising and prices are flat, so gross yields are rising. Look for areas with rail access and little unsold stock nearby. Avoid paying a new-build premium in districts that are already oversupplied.

Renters and sellers

Rents keep rising, so selling is slow

Renters should expect rent increases of about 3–5% at renewal. Sellers competing with developer terms should price to the register, not to the asking prices of neighbours.

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This outlook was issued on 8 October 2026, using data up to the June–July 2026 index, published 15 September. Price data is the Central Bureau of Statistics dwelling price index, which is provisional and revised as late transactions are registered. Rates and inflation are from the Bank of Israel, including its July 2026 staff forecast. Sales volumes are from the Ministry of Finance. Unsold stock is the CBS count at 30 June 2026; the April 2024 figure is approximate.

Forecasts are TAPI's own judgement, given as a central case and a range with rough probabilities. They are not a valuation of any property and not advice on any particular purchase or sale. We review the outlook after each CBS price release and each Bank of Israel decision.