Data from the Central Bureau of Statistics reveal an upheaval in the market since 2023 as the gap between the prices of 4-room apartments in Tel Aviv and the rest of the country has been narrowing. At the same time price gaps are narrowing between the city’s more expensive northern neighborhoods and the cheaper southern and eastern neighborhoods.

After apartment prices in the city peaked in 2021-2022 compared with neighboring cities, the trend has reversed and in 2025, Tel Aviv recorded its first price drop in six years.

A Tel Aviv home costs 2.5 times more than an average home in Israel.

In 2017, the price of an average 4-room apartment in Israel reached about NIS 1.5 million, while in Tel Aviv it was about NIS 3.4 million- about two and a quarter times more. In 2019, prices in Tel Aviv fell, apparently due to the then market crisis, as the apartment price index fell, and the number of deals fell to a low, similar to the current low.

However, immediately after the Covid pandemic, prices of four-room homes throughout Israel, including in Tel Aviv, began to soar, and between 2020 and 2022, prices increased by 20%. In Tel Aviv this meant an increase of almost NIS 1.1 million on the average price per apartment, while overall in Israel, the increase a little more than NIS 300,000.The result was that in 2022 the price ratio between a 4-room apartment in Tel Aviv and the national average reached almost 2.5 times.

What exactly happened in those years? It appears that beyond the economic conditions created after the Covid pandemic, which encouraged a rise in home prices (including lower interest rates and good credit terms), at the beginning of the decade the plans for Rova 3 and 4 in northern Tel Aviv (near City Hall, Kikar Hamedina, Bavli, Yehuda Maccabi Street, and more) began to have a major impact.

Although the Tel Aviv Planning and Building Committee had approved the plans in 2018, it took some years until the construction and marketing of the new apartments began. While TAMA 38 urban renewal projects had been carried out in these districts even before that, they were only to a small extent, partly because the municipality delayed granting permits for many projects before approving the overall district plans. The result of the entire process was that for the first time it was possible to buy new apartments in the Old North of Tel Aviv with the latest standards - with elevators, car parks, balconies, and of course, protected rooms.

At the same time, construction and marketing of apartments began in new projects in the Summayl district at the junction of Ibn Gabirol and Jabotinsky Streets. Wealthier buyers swooped on these apartments and were willing to pay high prices for them, which raised the average prices of deals throughout the city.

A study "Globes" conducted on five large cities in the Tel Aviv area - Ramat Gan, Holon, Bat Yam, Herzliya and Petah Tikva - reveals a similar picture. For example, a 4-room apartment purchased in Tel Aviv in 2017 was 49% more expensive than an apartment in Ramat Gan, 83% more expensive than an apartment in Bat Yam, 95% more expensive than an apartment in Holon, and twice as expensive as an apartment in Petah Tikva (the Central Bureau of Statistics began examining apartments in Herzliya only in 2023).

In 2022, the gap increased to 57% in Ramat Gan, 117% in Holon, 87% in Bat Yam, and 105% in Petah Tikva (where the peak was reached in 2021, when the gap was already 120%).

The slowdown: interest rates, the political situation, and taccumulation of inventory

In 2023, reality began to change and the price ratio between Tel Aviv and the average apartment price began to decline. There are three reasons for this. Firstly, the interest rate, which began to rise in April 2022, reached suffocating proportions that really affected the market in 2023.

Secondly, some believe, like developer Yossi Avrahami, that the government's proposed judicial reform and the protests contributed to declines in demand for apartments, especially in Tel Aviv, a city that craves political stability.

Thirdly, the excess supply that began to accumulate in the country in general and in Tel Aviv in particular. From the end of 2022, the supply of apartments jumped from 50,000 to 70,000 apartments at the end of 2023.

In December 2023, the Central Bureau of Statistics published the supply of apartments by city for the first time, and it turned out that the supply in Tel Aviv reached about 8,000 apartments. According to estimates, a significant part of these were the apartments in Rova 3 and especially Rova 4, which were built as part of the district plans.

The price ratio between prices of 4-room apartments in Tel Aviv and the national average dropped to 2.15, in Ramat Gan to 56%, in Holon to 110%, in Bat Yam to 81% and in Petah Tikva to 100%. From 2023, the prices of 4-room apartments in Herzliya also began to be measured, and there the price differences dropped from 41% in 2023 to 29% in 2025.

New Reality: Glass ceiling of NIS 50,000 per square meter

In Tel Aviv, the transaction prices for 4-room apartments last year were 0.6% lower than those in 2024. This may not seem like much, but compared to 2019, prices fell 5%.

According to a recent study by CPA Itay Kedmi, head of financial analysis at the Phoenix Institute for Capital Market Research at Reichman University, the discount rate on apartment prices embodied in financing deals conducted on apartments in the Tel Aviv district reached 13.3% of their prices. Therefore, it is clear that these deals greatly moderated the price declines in general and in Tel Aviv in particular, and they are not included in the Central Bureau of Statistics survey, which is based on nominal prices.

Another issue is the many apartments sold in Sde Dov at prices much higher than the city average, which tilted the average upward.

In the past three years, the average price of 4-room apartments purchased in Tel Aviv "touched" the NIS 5 million mark but did not cross it. This is a price threshold of about NIS 50,000 per square meter, which currently constitutes a "glass ceiling" or an insurmountable barrier to apartment prices in the city. This barrier can be explained mainly by the change in the mix of apartments currently being purchased in Tel Aviv, meaning less in prestigious areas and more in cheaper areas. This is why, although the prices of apartments purchased have continued to rise, the average has decreased.

It is not yet in danger of being overtaken by another city, but the data shows that even in the leading real estate city, not every price can sell.

Prices in Florentin and Yad Eliyahu are soaring

Looking at the different neighborhoods in Tel Aviv an analysis by the Real Estate Appraisers' Bureau shows an interesting picture for the years 2023-2025. The analysis shows that while the southern and eastern areas of the city recorded significant growth in prices, the situation is different in Rova 4.

According to the data, in Florentin, the price per square meter jumped by about 16% (to NIS 63,000) and in Yad Eliyahu, an increase of about 14% (to NIS 45,000), while in the north of the city the trend is much more moderate; in Rova 4, an increase of only 2%, to NIS 69,400 per square meter in 2025. These data indicate a gradual narrowing of gaps between the developing neighborhoods and the old luxury districts in the north.

Real Estate Appraisers' Bureau chair Nehama Bogin says, "The data analysis highlights an interesting phenomenon in the Tel Aviv market: the gaps between neighborhoods that were previously perceived as very different in terms of quality are narrowing. Florentin, which was perceived as an area in the process of gentrification is now approaching price levels of Rova 4, and the gap in price per square meter, which previously stood at tens of percent, is no longer significant. Florentin has become a sought-after area in recent years among diverse buyers, young people and families, and investors."

"We can see how Yad Eliyahu is starting to go in the same direction. In many ways, it is now where Florentin was a few years ago: a neighborhood with significant potential for improvement, fueled by urban renewal processes, improved infrastructure, and the entry of a new population. The double-digit price increase per square meter in a relatively short period of time could indicate a change in this direction, especially in a period when we are in a market with uncertainty, when we expect to see a moderation or decrease in home prices."

Inhouse Real Estate Marketing’s Raz Schrieber says, "The decline in prices in Rova 4 significantly reduces the gap between the north, and the east and south of the city. At the same time, an impressive price increase has been recorded in the south of the city. For example, in Florentin, the price per square meter of new four-room apartments is close to prices in the north.

"Due to this, we are identifying a 'shift' in demand for other neighborhoods such as Bitzaron, Yad Eliyahu, and more. To the increase in demand and interest around the south of the city, we must also add the investment in infrastructure initiated by the municipal authority after years of neglect, as well as the development of the light rail lines..

"In Yad Eliyahu, for example, the infrastructure has been developed and Afeka College is expected to move to the neighborhood. Yad Eliyahu shows that in East Tel Aviv you can still find affordable prices. It seems that in recent years it has lived in the shadow of more sought-after and attractive areas of the city, but now it is at a jumping off point."

Tel Aviv and Central District Contractors and Builders Association CEO Eli Rosenthal adds, "The data reflect a reality in which established areas like Rova 4 with high competition between different developers, along with interest rates and rising construction costs, are eroding the economic viability of some projects.

"We see clear economic logic in directing resources and promoting projects in additional areas of the city to neighborhoods where future improvement potential can be identified, especially in neighborhoods that enjoy a central location, transport accessibility and urban renewal processes that create real value over time - both in terms of overall visibility and in terms of improving and upgrading infrastructure."

Published by Globes, Israel business news - en.globes.co.il - on April 26, 2026.

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