Israel Housing Prices Down 1.7% Year-Over-Year, New Apartments Drop Nearly 4%

Israel housing prices edged down by 0.1% in January-February, marking the second consecutive monthly decline, according to the CBS Housing Price Index published Wednesday evening. New apartment prices fell by nearly 4% over the past year, while apartment prices in the Tel Aviv district dropped by about 5%. By contrast, the Construction Cost Index rose by 2.1%. The vice president of the Contractors Association said, “The government is abandoning the rental market and has contributed to rising prices.”

By Nimrod Buso, Nadlan Center

Israel housing prices declined by 0.1% in monthly terms during January-February 2026, according to the housing price index published Wednesday evening by the Central Bureau of Statistics. This is the second consecutive month in which home prices in Israel have posted this minimal decline. However, compared with the corresponding period last year, January-February 2025, apartment prices were down 1.7%. The new apartment segment recorded a steeper decline over the past 12 months, at 3.9%.

A breakdown by district shows that in January-February 2026, compared with December 2025-January 2026, prices fell in the Jerusalem and Tel Aviv districts by 0.7% each, while prices rose in the Northern District (0.9%), Haifa (0.3%), Central District (0.5%), and Southern District (0.2%).

Comparing transactions carried out in the current period with those in the corresponding period last year, meaning January-February 2026 versus January-February 2025, price increases were recorded in Jerusalem (4%), the North (2.2%), Haifa (0.5%), and the South (0.4%), while price declines were found in Tel Aviv (5.1%) and the Central District (3.1%).

Rents rose by 6% in apartments where tenants were replaced

The Consumer Price Index rose by 0.4% in March compared with February. Over the past 12 months, March 2026 versus March 2025, the Consumer Price Index increased by 1.9%.

In the rent component, tenants who renewed their contracts saw an increase of 2.2%, while new tenants, in apartments where a tenant turnover took place, saw an increase of 5.9%. The CBS said that “these rates of change reflect an approximation of the annual rate of change in rent in these groups. This is because rent does not change for the overwhelming majority of tenants over the course of the year, due to their being under a lease agreement in which the monthly rent is fixed, usually without indexation mechanisms.”

Labor costs rose by 4.4%

The residential construction input price index rose by 0.2% in March 2026. Over the past 12 months, from March 2025 to March 2026, the residential construction input index rose 2.1%, mainly due to a 4.4% increase in labor costs.

The materials and products price index rose by 0.2% in March 2026. Among the materials and products that recorded particularly notable increases were steel profiles (4.6%), gray cement (2.2%), blocks (1.3%), mortar and plaster (1.2%), and elevators (1%). By contrast, the price of construction iron fell by 2.6%.

The wage index paid to employees in the sector rose by 0.2%.

Amit Gottlieb, vice president of the Contractors Association, said: “Tonight’s headlines, before anything else, are the result of the state’s disregard for its duty to reduce inflation by lowering rental prices, which account for a quarter of the Consumer Price Index. For more than two and a half years, we have continuously warned about the danger to the economy from the continued surge in rental prices. This surge is not temporary, and anyone who says that missile fire on Israel is the main accelerator is mistaken and misleading.”

Gottlieb added: “From the day it was established, the current government has abandoned the rental market in Israel and has repeatedly contributed to rising prices by acting to push investors away from it and by refraining from encouraging rental construction. The government must reduce the purchase tax on investment apartments. The most prominent victims of the turmoil in the rental market are the younger generation, working men and women, taxpayers, and those who fought and continue to fight in reserve duty for all of our home. The government must wake up and encourage investment in apartments and the establishment of long-term rental housing under full regulation of the entire field.”