Real estate market index
Israel's property index went through a cooling phase in 2017–2018, but during the Covid period and immediately after restrictions were lifted it entered a phase of rapid growth with signs of approaching overheating. With the start of the operation in Gaza the index did undergo a correction, yet by the end of 2023 it had resumed its upward trajectory. In early 2025 the index recorded growth before returning to the levels seen at the end of 2024.
Number of real estate transactions
In 2025 Israel's property market is showing a partial recovery in activity following the downturn of 2023, but transaction volumes remain below historical averages, indicating persistent caution among buyers.
Average price per square metre
In 2025 the price structure of Israel's property market remains distinctly polarised. Tel Aviv retains its position as the country's most expensive market, at around 47,000 shekels per square metre, posting only moderate growth against a background of declining liquidity. Jerusalem ranks second at roughly 33,500 shekels per square metre, supported by steady domestic demand and limited new supply.
Haifa and Netanya are in a phase of moderate growth and stabilisation, while Beer Sheva remains the most affordable market and is highly sensitive to interest rates and the availability of mortgage financing.
Rental yield
Israel's rental market is characterised by structurally low yields. In 2025 rental yields remain moderate and inherently compressed, reflecting the combination of high property prices and steady rental demand.
Tel Aviv posts the lowest yield (around 2.2%), reinforcing its status as a capital-preservation market rather than an income-oriented investment destination. Jerusalem and Netanya fall within the 2.7–2.8% range, offering a relative balance between stability and return.
The highest yields are found in Beer Sheva (approximately 3.6%) and Haifa (around 3.0%), which makes these markets more attractive to investors focused on current cash flow — albeit with higher local risks.
Foreign demand
In 2025 the number of transactions involving foreign buyers is estimated at around 4,000, or roughly 4.5–5% of total market volume. Against a background of moderate recovery in overall transaction activity after the 2023 downturn, the foreign segment remains structurally compressed and has not returned to the levels of the mid-2010s.
This confirms that in 2025 Israel's property market continues to be driven above all by domestic demand, with foreign buyers playing a complementary rather than systemically significant role.
Leading buyer countries
Among foreign buyers, the most active groups are Americans, French, British, Canadian and Russian nationals.
By the end of 2025 Israel's property market had emerged from its phase of sharp decline, yet the recovery proved limited and uneven. Transaction volumes rose compared with the crisis year of 2023 but remained materially below the levels of 2016–2022. This indicates that the market has not yet returned to a normal activity cycle and is still constrained by macroeconomic and financial factors — above all high interest rates and limited mortgage availability.
Price performance in 2025 was characterised by stability without acceleration. In the country's largest cities prices continued to rise moderately or stabilised, with no meaningful decline despite the fall in transaction volumes in previous years. This confirms the structural shortage of supply and the high inertia of the Israeli market. Tel Aviv and Jerusalem retained their position as the most expensive and least profitable markets, geared primarily to capital preservation. More affordable cities such as Beer Sheva and Haifa delivered higher rental yields but remain more sensitive to interest rate movements and the general economic environment.
Rental yields in 2025 remained low by international standards and do not fully compensate for the high cost of market entry. This underlines that Israel's property market is fundamentally geared to long-term ownership and capital preservation rather than to current cash flow. At the same time, rental demand remains stable, which limits the risk of a sharp fall in prices even when buyer activity weakens.
The foreign segment retained a secondary role in 2025. The number of transactions involving foreign buyers remained limited and their share of total market volume shows no signs of structural growth. This indicates that the dynamics of the Israeli market are determined above all by domestic factors — demographics, household incomes, the cost of financing and the volume of new construction.
In 2026, under the base case, Israel's property market is expected to continue moving towards gradual stabilisation. A significant rebound in transaction volumes is unlikely: activity will grow slowly and remain below historical peaks if interest rates stay relatively high. Prices are likely to trend sideways, with moderate growth in the most liquid cities and stagnation in peripheral areas. The probability of a large-scale price correction remains low, given the structural shortage of supply and resilient rental demand.
Overall, in 2026 Israel's property market remains highly resilient but offers limited investment returns. It is well suited to strategies of long-term capital preservation and selective investment in liquid locations, but it is not a market of rapid growth or high rental yields. The key risks in 2026 are the cost of debt financing, the pace of new construction and general macroeconomic uncertainty, while the fundamental drivers of demand continue to play a stabilising role.
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