Increase in investors selling homes in Israel at a loss

Over 10% of real estate investors who bought cheap apartments, mainly in the south and especially in Beersheva, have been the first to feel the change in atmosphere in the real estate market, the Ministry of Finance chief economist’s first quarter survey of the residential real estate market has found.

The real estate market has been cooling since the start of 2025, and this is also reflected among investors. Overall, there is a noticeable increase in the number of apartments that investors sold in the first quarter of this year, compared with both the preceding quarter and the corresponding quarter of 2024. An analysis by region found that in six out of ten tax districts, there was an increase in apartment sales by investors. This raises the possibility that investors felt that the increase in apartment prices had exhausted itself, and the market is set for declines. For the four consecutive months between February-March and May-June 2025 there have been declines in the Central Bureau of Statistics apartment price indices.

However, this was not the only reason. A closer examination revealed that not all exits made by real estate investors were successful. About 11% of these apartments were sold at a real capital loss to the sellers. In other words, investors sold apartments at prices that may have been higher than their purchase price, but when linked to the index, was lower. These investors concluded that it was better to cut losses and sell.

As in previous quarters, even before the outbreak of the war, the region that recorded the highest rate of sales at a loss is the Southern Region, where 21% of homes sold by investors in this region were sold at a real capital loss.

Tel Aviv area: 7% increase compared with the corresponding quarter

The Tel Aviv District also recorded sales at a loss, but here it was 7% of sales. These are still significantly lower numbers than the national average, but the fact that in the first quarter of 2024 the rate reached only 4% indicates that with the change in the direction of the market, even investors in areas that were previously considered “safe” need to exercise caution.

In the ranking of cities where most real estate investors have sustained losses, Beersheva leads the way with 31% of investor sales that were made at a real loss; followed by Eilat 15%, Kiryat Gat 14%, Kiryat Ata 12%, and several cities from the Tel Aviv area: Holon, Ramat Gan, Petah Tikva, Bat Yam, and Ramla, in all of which about 11% of the total apartments sold in the first quarter of the year resulted in losses for investors.

On the other hand, in Rehovot, Givatayim, Hod Hasharon, Nesher, Afula and Nahariya – no apartments were found that were sold at a real capital loss. In Herzliya, Netanya, Ashdod, Rishon LeZion, Tel Aviv, Bnei Brak, Lod and Kiryat Bialik, just a few apartments were found that were sold at a loss.

Low rate of apartment purchases by foreign residents

The chief economist also examined purchases by foreign residents and found that in the first quarter of 2025, 433 apartments were purchased, up 37% from to the preceding quarter, but down 12% compared to the first quarter of 2024.

Overall, since the outbreak of the war, there has been an increase in the number of apartments purchased by foreign residents, but these are very low volumes of purchases, which constitute about 2% of all transactions in the market. This is in contrast to 20 years ago, when purchases by foreign residents were at their peak, and were four times higher than the numbers purchased today, accounting for 5% of all transactions.

In those days, foreign residents came from different sectors and purchased apartments in cities like Jerusalem, Tel Aviv, Ashdod, Raanana, Herzliya and Netanya. Today, the only area where foreign are purchasing apartments is Jerusalem, and most of the buyers are religious and haredi.

Published by Globes, Israel business news – en.globes.co.il – on September 4, 2025.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.