Tel Aviv, Jerusalem lead home price falls

Home prices have fallen 2% over the past year with far bigger price falls in Israel’s two largest cities.

Home prices in Israel fell by 1% in the latest monthly index of the change in home prices published by the Central Bureau of Statistics, after falling 0.3% the previous month, and have fallen 2% over the past 12 months. At the same time rental prices for apartment rose 0.9% last month, the biggest jump for 11 months.

When analyzing in depth the types of homes that fell in price at the highest rates, the biggest declines were in second-hand apartments, mainly in the Tel Aviv and Jerusalem areas. In the Haifa and northern areas, prices fell at lower rates of about 0.5%, while in the center and south they remained unchanged.

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What happened in Tel Aviv and Jerusalem that lowered the index so much?

The declines are not surprising. The markets in Jerusalem and Tel Aviv tend to have the most extreme reactions, both in price increases and price decreases. Peak prices in Tel Aviv were recorded about 18 months ago and have since fallen by about 6%. In Jerusalem, peak prices were recorded in November 2025 and have since fallen 6%. This is compared to declines of 1-4% in the rest of the country, from peak levels.

Although occasionally, recent increases have been recorded in Jerusalem and Tel Aviv, and sometimes sharp ones, the trend is downward, and just as they "carry" the market higher during price increases - so too during decreases.

Why do second-hand apartments fall more?

Behind real estate developers stand banks that support minimal price decreases and financial operators that also moderate decreases for new homes. Individual apartment owners do not have such a solid financial backing, and they are forced to compromise on price.

Does the big drop hint at future declines?

Absolutely not. As prices are currently in a downward trend, everything can change - and quickly. First, the security-geopolitical situation in which Israel finds itself has not yet ended, and this has boosted rentals. October 7th broke a trend of falling rents that had characterized the market in the three preceding quarters.

Second, it has been proven that the domestic political mess can also affect home prices, and election campaigns, especially prolonged ones like the series of elections 6-7 years ago, contribute to price increases.

Third, if interest rates continue to fall at rates that are significantly greater than the reductions so far, it is possible that this will bring new potential buyers into the market, contributing to price increases.

Published by Globes, Israel business news - en.globes.co.il - on July 16, 2026.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.