Israeli Housing Prices Essentially Unchanged Over Past Several Months

The central district, which does not include Tel Aviv, is the only one where prices have increased over the past year

Residential properties stand on the city skyline in Jerusalem, on March 16, 2014.
Ariel Jerozolimski/Bloomberg

Are housing prices going up or down? For the past several months, the home price index has been essentially unchanged, shifting mildly between small increases and minor drops.

After several months of increases of more than 1%, the index for July-August of 2018 dropped by 0.3%, for an annual decrease of 1.2% and a drop of 1.5% from the index’s peak in August-September 2017.

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New home prices dropped 1.2%. A considerable portion of the price decline is due to lower prices in central Israel, the country's largest region from a population standpoint. Prices in the Tel Aviv region, which is not included in the central region, decreased 0.6%.

The sharpest price decreases, however, were in the north, where they were down 1.4%. Prices in the Haifa and southern Golan Heights regions were unchanged, while those in the Jerusalem region increased 0.2%.

The slow decline
Home price index in points 
(January 2010 = 100 points)

Prices in individual regions began to fall during the period from October-November of last year. For the period since then, prices have fallen in five out of Israel’s six regions. The sharpest drop has been in Jerusalem, at 3.6%. Prices in the northern district have fallen by an average of 2.6%. In the nearby Haifa district, prices have dropped an average of 1.7%, while in the southern district they are off 1.1%. In the Tel Aviv district, prices have fallen 0.9% from October-November 2017.

The only area to buck the trend was the central district, where prices increased 0.3%. This is the only district where prices have increased since October 2017.

The housing price index demonstrates the relative strength of the housing market in central Israel compared to outlying areas of the country and Jerusalem. This is the result of the high demand for housing in central Israeli towns. In the second quarter of 2018, a whopping 40% or so of all home sales were in central Israel.

By contrast, there has been a sharp drop-off in sales in other districts. In some outlying areas, home sales made through the government-subsidized Mehir Lemishtaken (buyer's price) housing program have essentially halted all other sales in the area.