Home prices in Israel in 2025 continue their upward trend with average prices increasing by 7.3% year-on-year and rents rising nationwide. Tel Aviv and Haifa saw the sharpest home price increases, while Jerusalem experienced more modest growth. Government subsidies for new homes have slightly declined, contributing to higher prices, with newly constructed apartments rising by 4.4%. Inflation and a 5.3% increase in construction costs further drive up housing expenses. Despite localized price adjustments in some areas, affordability remains a growing concern for buyers and renters alike.
The latest data from the Central Bureau of Statistics (CBS) published on Friday highlights continuing trends in the country’s housing market, revealing both regional variations and overarching patterns that impact buyers and investors. As of February 2025, the CBS reports on the state of home prices in Israel, comparing figures from late 2024 to those of the previous year.
Between November 2023 and November 2024, the price of homes in Israel increased by 7.3%. While this marks a continued upward trend, it follows a period of notable price fluctuations in recent years. After a decline in housing prices during the latter half of 2023, the market regained momentum in early 2024, with prices climbing steadily throughout the year.
In the two months between November and December 2024, compared to the previous two months, home prices increased by 0.4%, implying sustained growth in the short term.
Current Home Prices in Major Cities in Israel
The average home price in Israel during the last quarter of 2024 stood at 2.7 million shekels, reflecting a 2.7% rise from the previous quarter and a 7.6% increase from the same period in 2023. In Tel Aviv, the average property price was 4.1 million shekels, while in both Jerusalem and Netanya, average home prices were around 2.8 NIS. In Bet Shemesh, the average property price stood at 2.3 million shekels. Meanwhile, Haifa, Ashkelon, and Be’er Sheva remained the most affordable major cities, with average prices between 1.3 and 1.7 million shekels.
Price Trends Vary Across Regions
Housing price changes across Israel in 2024 were not uniform, with some regions experiencing sharp increases while others saw more moderate growth or even declines. Tel Aviv saw a 9.4 percent increase in housing prices, driven by persistent demand and a limited housing supply. Haifa recorded the most significant growth at 11.1 percent, making it one of the fastest-rising markets in the country. The central region followed with a 5.7 percent increase, while the southern region saw prices rise by 4.9 percent. Jerusalem had the most moderate growth at 3.1 percent, reflecting the city’s evolving market dynamics.
These regional variations reflect supply constraints in high-demand areas, shifting buyer preferences, and the impact of new developments in emerging markets.
Price of New Homes
From November 2023 to November 2024, the price index for newly constructed apartments increased by 4.4 percent, while in November-December 2024 alone, new home prices rose by 0.7 percent compared to the previous two months. However, when excluding government-discounted purchases, the price index for new apartments remained almost unchanged, rising by just 0.2 percent.
Rising Rental Prices Across Israel
With demand outpacing supply, Israel’s rental market remains tight, pushing rents higher.
- Tenants renewing their leases faced a 2.6% increase in rent, reflecting sustained demand in established neighborhoods.
- New tenants saw an even sharper increase, with rents climbing 3.3%, driven by limited supply and high competition in key urban areas.
Competition for rental properties remains fierce, particularly in major cities, making affordability a growing concern for renters.
Inflation’s Role in the Housing Market
Beyond home prices, inflation and rising construction costs are also reshaping the market. The Consumer Price Index (CPI) climbed a fairly sharp 0.6% in January 2025, reflecting an annual rise of 3.8%.
Meanwhile, in January 2025, the Construction Cost Index rose 2.6%, a sharp rise compared to 2024’s gradual increases, bringing the total increase over the past year to 5.3%. The spike was primarily driven by a 9.2% rise in labor wages and a 3.2% increase in equipment and vehicle rental costs. Prices of key building materials also climbed, with imported concrete up 5.2%, mortar 4.0%, wall and floor tiles 1.8%, and marble 1.1%. As construction costs continue to rise, developers are likely to pass these expenses onto buyers, potentially pushing home prices higher.
The Buyitinisrael team includes industry experts, journalists, researchers, editors, and translators, all working together to provide reliable, up-to-date information about the Israeli property market in English. With a focus on transparency and accessibility, the goal is to empower English-speaking buyers by helping them understand the market and navigate the real estate process with confidence.
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