May was one of the weakest months for housing sales in Israel in the past 25 years, according to the latest survey by the Ministry of Finance chief economist on the residential real estate market. In May there were 6,698 housing deals, down 16% from May 2024. Sales of new homes by contractors continue to shrink with 1,720 homes sold in May, down 44% from May 2024, not including 654 homes sold at a discount in government subsidized programs.
The chief economist also found that a fall in developers’ buy now pay later (20%-80%) offers continues. These declines began following the publication of the Bank of Israel’s restrictions on such operations, however, the falls are not evenly spread in all regions of the country. The report notes, “The Netanya region, which includes the Sharon cities, is particularly prominent. Thus, from a rate of approximately 66.6% of total builders’ sales in the free market in this region in March, the rate fell to only 20% in May. A sharp decline in the prevalence of financing discounts was also recorded in the Hadera region and a more moderate decline in the Beersheva region. On the other hand, the central region stands out with an increase in the relative prevalence of financing deals in May, continuing the increase recorded in the previous month. Ramat Gan stands out in particular, with financing discounts accounting for 70% of contractors’ sales in this city in May, compared with only 27% in March.”
Rise in apartment sales with protected room even before Iran war
The report also shows that Iran is the best promoter of sales of apartments with protected rooms. The data shows from when the Iranian started launching missiles at Israel last year, apartment buyers increased their purchases of apartments with protected rooms.
The obligation to report whether an apartment being purchased has a protected room began only a year ago. All new apartments include a protected room, but a large proportion of older apartments were built before the obligation to include a protected room, which began in 1992, and they do not include protected rooms, with the exception of apartments that underwent the TAMA 38 process, in which a protected room was added.
A previous survey conducted by the chief economist found that following the first and second missile attacks from Iran, in May and October 2024, the proportion of second-hand apartments sold that include a protected room jumped. After reaching 58% of all second-hand apartments purchased in May (compared with 55% in previous months), the percentage of apartments with a protected room out of all second-hand apartments purchased fell to 52%, until in September and October 2024 it rose again, reaching 56% in October. Apparently, between the two missile attacks, the public had the feeling that the escalation of hostilities with Iran, and the wars in Lebanon and Gaza, were on the decline.
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After the second missile attack, and with the outbreak of the campaign against Hezbollah in September 2024, the public realized that the war could last longer, and become more destructive and dangerous. By the end of 2024, a relatively high percentage of apartments purchased with a protected room remained at about 55% of all second-hand apartments purchased. This may be due to the large price differences between apartments with and without protected rooms, and to the great reliance of Tel Aviv residents on their proximity to home and public shelters.
In the Haifa region, on the other hand, which was threatened by rocket fire from Lebanon more than any other region, except for the north, an increase in the rate of deals with protected rooms has been recorded since the ceasefire agreement with Lebanon was signed in November 2024.
Since January 2025, the proportion of apartments with protected room out of all second-hand apartments rose again, reaching a peak of 60% in April. The chief economist speculates that this was, “Due the media talk about the possibility of a war against Iran, which broke out on June 13”.
However, the trend was not uniform in all regions, and in the Tel Aviv region, which includes only the cities of Tel Aviv and Bat Yam, a decrease was recorded since the beginning of the year in the rate of apartments with protected rooms among all second-hand apartments purchased.
Published by Globes, Israel business news – en.globes.co.il – on July 9, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
