Israel's Real Estate Crisis: Brokers and Experts Warn of Prolonged Slump
Israel's real estate market faces a severe three-year slump, with second-hand transactions plunging and brokers warning of a silent economic collapse across related industries.
The Israeli real estate market has been grappling with a severe and protracted slowdown for the past three years, heavily impacting brokers, investors, and an entire chain of related businesses. Yaron Shamir, owner of the long-standing agency "Avenue Real Estate" in Holon and Bat Yam with 18 years of experience, notes that he has never witnessed a crisis of this magnitude. "The market is sluggish and refuses to pick up, something I have never known," he testifies. "Everything came to a halt when interest rates rose and people sat on the fence waiting. Meanwhile, a war broke out, and since then we have been in a low-demand market with significantly fewer phone calls and meetings."
Data from the Chief Economist's Division at the Ministry of Finance illustrates the structural shift in the second-hand housing market: in April 2021, approximately 8,000 second-hand apartment transactions were executed in Israel, compared to only about 4,300 in April 2025—a decline of roughly 46%. According to the Central Bureau of Statistics, between February and April 2026, 12,560 second-hand apartments were sold nationwide, representing a 12.9% drop compared to the same period in 2025.
Bank of Israel Data and Market Slowdown
Even the Bank of Israel describes a market undergoing a clear deceleration. In its annual report for 2025, the central bank determined that the total number of transactions in the housing market stood at approximately 91,000 apartments—an 11% decrease compared to 2024. Conversely, the volume of second-hand transactions remained relatively stable year-over-year. The report also highlights high interest rate environments relative to the pre-inflationary era, alongside the high attractiveness of capital market yields compared to housing, as primary drivers behind the market weakness.
For brokers, these numbers translate directly into a livelihood struggle. "An apartment that once sold within two months can now sit on the market for half a year or even a full year," Shamir says. "Some brokers have left the field, while others supplement their income with secondary jobs. Ten of my colleagues have abandoned the profession just in the past year alone. We cannot sustain this much longer."
The Investment Dilemma and Taxation
Itzik Levy, Chairman of the National Real Estate Brokers Association, describes a crisis that began even before October 7 and deepened further as developers' financing promotions lured buyers toward new construction while severely damaging the second-hand segment. "Since buyers were required to pay most of the amount only after three or four years, they were in no rush to sell their existing apartments. This was a death blow to the second-hand market," Levy explains.
Shamir points out that taxation policies have made investing in Israeli real estate profoundly unattractive, driving capital abroad. "Purchase tax on a second apartment is very high—8% goes directly to the state for the pleasure of buying a property in Israel, driving investors away. They find markets overseas where this barrier does not exist, discovering neighboring countries like Greece, Cyprus, Portugal, and Spain, as well as traditional investments in the U.S." Furthermore, bank deposits offering 4% to 4.5% risk-free interest on a million shekels far outperform rental yields ranging between 3% and 3.3%, rendering real estate investments far less compelling.
A Silent Collapse Across the Entire Economy
The downturn does not stop at brokers; it cascades down to small businesses and independent professionals. "There is a consistent and silent collapse here that will one day blow up in our faces," Shamir warns, citing mortgage advisors, appraisers, real estate attorneys, handymen, interior designers, appliance retailers, and movers who share the burden of declining activity.
Both Levy and Shamir urge the government to adopt an emergency national plan, reduce purchase tax, lower interest rates, and grant temporary income tax exemptions on rental income to revive the sector. "Decision-makers must understand: the state of brokers and the market is not a sectoral problem—it is the barometer of the entire Israeli economy," Levy concludes.
