Israel Housing Prices Rise After Months of Declinen - debate if rebound marks a trend shift

 Israel’s housing price index rose an unexpected 0.7% in October–November, ending eight consecutive months of decline, according to data released by the Israel Central Bureau of Statistics (CBS). On an annual basis, however, price growth remained muted. From November 2024 to November 2025, the housing price index edged up just 0.1%, underscoring continued weakness in the broader market.

The latest rise was driven primarily by new apartments sold by contractors, where prices climbed 1% during the two months. Excluding government-subsidized housing, new-home prices rose by 1.2%. Prices of second-hand apartments increased more moderately.

Despite the recent uptick, prices of new apartments are still down 0.8% year-on-year, reflecting the prolonged slowdown in the construction and sales market.

Regional Divergence Widens

Price movements varied significantly by region. The sharpest turnaround was recorded in the Tel Aviv district, which accounts for roughly half of all apartment transactions nationwide. Prices there rose 1.2% in October–November, reversing a 1.8% decline in the previous period.

In the Jerusalem district, prices increased by 1.5%, slightly above the 1.4% rise seen a month earlier. Jerusalem continues to stand out, with prices up a striking 9.4% over the past year, compared with annual gains of 2.8% in Tel Aviv and 2.9% in the central region.

Prices rose by 0.5% in both the southern and northern districts, while the Haifa district was the only area to record a decline, with prices falling 0.3%.

Market Signals Remain Mixed

Despite the headline increase, other indicators — including transaction volumes and the size of unsold housing inventories — point to continued stagnation. Analysts said it remains unclear whether the rise signals a genuine shift in trend or reflects temporary factors, such as pent-up demand following the October holiday period.

Another factor cited by market participants is the growing use of “benefit campaigns,” in which developers offer incentives financed in part by higher list prices, potentially inflating headline figures. Increased sales of high-end projects in northern Tel Aviv may also have lifted average prices.

Rents Continue to Climb

The CBS also reported that the rent index rose 0.3% in December. Rents for tenants renewing existing contracts increased by 3.0%, while rents paid by new tenants jumped 4.6%, highlighting ongoing pressure in the rental market.

Reacting to the data, Roni Brik, president of the Israel Builders Contractors Association, said developers have begun to see a gradual increase in demand since November, following roughly six months of stagnation.

“It is still too early to determine whether prices will continue to rise next month, but the trend became clearer in January based on reports from developers and contractors,” Brik said.

He warned, however, that the industry remains unable to return to full capacity, citing a severe shortage of workers. Brik urged the government to allow the direct recruitment of tens of thousands of foreign workers, arguing that claims of large inventories of unsold apartments are misleading.

“Many projects have been halted because developers simply cannot build,” he said. “If the situation continues, we may soon face a housing shortage that will harm the entire economy.”