Real estate investors are buying more expensive apartments than before, the Israel Tax Authority has found in its survey on state revenues from real estate taxes. In the six months between December 2023 and June 2024, the prices of apartments purchased by investors was 14% higher than in the previous survey, with a median price of NIS 2.3 million.
The survey also found that state revenues from real estate taxes increased by NIS 1.5 billion in 2024 from 2023, but was down 40% from the peak revenues received in 2022. Investors have been withdrawing from the housing market, mainly due to a hike in purchase tax from 5% ten years ago to 8% today. According to the Tax Authority data, in 2023, an average of 1,150 investment apartments was purchased per month, down from an average of 1,736 per month in 2022. The Ministry of Finance chief economist, who has also examined the most recent period, found that in 2024 and the first quarter of 2025, 1,260 apartments were purchased for investment – a major increase from 2023, but a major decrease from 2022.
What is behind the trend?
Despite the clear trend of a fall in the number of apartments being bought, the Tax Authority report shows that between January 2023 and June 2024, prices of apartments bought for investment rose significantly, after rising moderately in 2022. In June 2024, prices reached a median of NIS 2.3 million per apartment, up from NIS 2 million in December 2023, during the first part of the war. Despite this, the price of an apartment purchased for investment in December 2023 was also 11% higher than the median price of an apartment purchased in December 2022.
This is an interesting finding, especially with regard to 2023, as during that year there were price declines in the apartment price index, which consists mainly of transactions carried out by buyers of single apartments (to live there themselves). However, even compared with the apartment prices that rose in 2024, the behavior of investors was different in the sense that they chose apartments, with greater price increases than buyers of single apartments.
Tracking prices of apartments purchased by investors shows that between 2019 and 2021 they reached a median level of NIS 1.3 million; between 2021 and the first quarter of 2023 prices ranged between NIS 1.5 and 1.6 million, and then the big jump in prices began, crossing the median threshold of NIS 2 million in January 2024, even though the war was in its early stages.
Real estate taxes include: purchase tax, a graduated tax imposed on apartment buyers and calculated according to the price of the apartment: and appreciation tax, which is imposed on real estate sellers with more than one apartment and is calculated according to the appreciation (increase in value) of the property during the period it was owned by the seller. The amount of state revenue from these taxes depends on the rate of increase/decrease in prices and the number of transactions in the market.
Last year, real tax revenues totaled NIS 15.9 billion, of which NIS 10.3 billion came from purchase tax and NIS 5.6 billion from appreciation tax, up about 10% compared with real estate tax collection in 2023, when the war broke out, but a large decrease from 2022, which was a record year for real estate tax collection, which was NIS 26.4 billion.
Published by Globes, Israel business news – en.globes.co.il – on May 26, 2025.
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