This was not an ordinary year in the housing market. Supply increased, demand weakened, and the public sat on the fence - tired, cautious, and above all, disappointed. Everyone was waiting for price drops, and they did occur. But not at the pace, intensity, or depth that many had hoped for. Those waiting for a double-digit crash are finding a different reality: A market that is correcting itself slowly, carefully, and mainly without major drama.

At first glance, it seems like a natural process. Apartment prices reached excessively high levels, and the market had to pause for a moment. During the boom years, apartments sold almost without thought, like off-the-shelf products. 90-10 deals became the norm, and entering the market seemed easier than ever. Paying ten percent? No problem. The problem began later, when it was time to cover the remainder - precisely when prices were already falling. That’s when it became clear: Not everyone was built for this.

And here comes the real big question: Not how much prices have fallen, but when the direction will reverse. The moment when the market signals that the drops are behind us, and prices begin to rise. History shows that when this moment arrives - the public does not wait. It rushes in. This is the way of the Israeli housing market.

Many Apartments, Few Solutions

The latest data from the Central Bureau of Statistics tells a double story. On one hand, between October 2024 and September 2025, construction of about 81,000 apartments began - a 31.5% increase compared to the previous year. After a period of stagnation, war, and uncertainty, the construction market is waking up. Tel Aviv and the central region lead the way, but sharp increases are also seen in the periphery.

At the same time, a startling figure emerges: about 84,000 unsold apartments - a historic high, double what it was five years ago. Tel Aviv tops the list, with its largest crisis. But here we must clarify: Many of these apartments are still in planning or construction stages - they are not really “waiting for a buyer.”

On the other hand, bureaucracy strangles the market. The average construction time has extended to about 32 months. Building permits? About three years on average. Two decades ago, this took just a few months. The implication is clear: The market is full of apartments “on the way,” but lacking ready units. The pressure hasn’t disappeared - it has just been postponed until delivery.

And then comes the state. A new year begins - with no real breakthrough. Property tax, which returned after 25 years, is the latest announcement. Taxation on vacant land, not as part of a long-term planning strategy, but out of immediate need: Reducing the deficit and filling budgets after the war. A short-term solution that deepens uncertainty instead of creating stability.

Promotions Do Move the Market

“Apartments aren’t selling” has become a constant refrain. But on the ground, something else is happening: Promotions work. Trade-ins, generous financing, benefits not seen here for years. Builders understand there is no alternative. The public, meanwhile, no longer buys recklessly. This is a market of cautious consumption, thorough checks, and reevaluating cost-effectiveness.

The numbers speak for themselves: In October, only 3,639 transactions were made in the free market - a nearly 40% drop in a single month. Fewer than 1,100 new apartments were sold. Investors, young couples, and those upgrading their homes - all are retreating. Some are even downsizing to smaller, cheaper apartments.

So Where Is This Going?

High interest rates, economic uncertainty, and the high cost of living keep buyers away from all types of apartments. Even the large wave of immigration has not yet arrived. The forecast is not bleak, but it requires adjustment. Small companies, mainly in urban renewal, will struggle to survive. Larger firms will strengthen. The market will concentrate among more stable players.

And in the end, as always, real estate will return to being the engine of the economy. The only question is how long it will take for the public to step off the fence, and how much it will cost them to wait “just a little longer.”