Israel's housing market is sliding into recession with Tel Aviv leading in sales of new apartments but also having the biggest supply of new homes, while Haifa leads in second-hand home sales, according to the latest Central Bureau of Statistics figures on housing deals in January 2025. Housing supply is again breaking records, even though in December 2024 there was a rush of buyers to purchase new apartments, ahead of the VAT hike in January 2025.
The Central Bureau of Statistics data show that Tel Aviv leads in the sale of new homes. Between November 24 and January 25, 871 apartments were sold in the city, followed by Jerusalem with 767 apartments sold, Ofakim with 760 apartments and Lod, with 686 new apartments.
Tel Aviv also leads in the supply of apartments. The city has 8,975 new unsold apartments, ahead of Jerusalem with 7,354 unsold apartments, Bat Yam with 4,137, Ramat Gan with 3,543, and Netanya with 3,381 unsold new apartments.
The large cities with the lowest supply of new apartments are Kfar Saba, with 426 new unsold apartments, Herzliya with 838 apartments, Holon with 947 apartments, and Hadera with 959 new unsold apartments.
About 60% of the apartments purchased in Tel Aviv were new apartments, making it the leading city where buyers are looking to purchase apartments from new projects rather than second-hand homes. This situation usually characterizes cities in the periphery, where the majority of new apartment deals are part of government subsidized programs for first-time buyers.
In the sale of second-hand apartments, Haifa leads with 935 apartments sold there between November 2024 and January 2025, followed by Jerusalem with 908 apartments, Beersheva with 860 apartments, Tel Aviv with 604 apartments, and Ashkelon with 493 second-hand apartments sold.
Supply of new apartments again at record levels
In general, the supply of unsold new apartments reached about 78,000 new apartments in January, which is equivalent to 18 months of construction, continuing to break records, despite the difficult situation for real estate developers, who start new projects even before they manage to sell the apartments in their previous projects. This issue is due to commitments in urban renewal projects and in projects that include apartments sold in government subsidized housing programs.
The large supply of apartments is not only in big cities. Smaller cities also have a very large supply of apartments, relative to the size of the local market: in Beer Yaakov there are 2,460 unsold apartments, in Lod 2,250, in Kiryat Ono 1,460 apartments and in Ra'anana 1,440. This is an unusual situation, especially as some of these towns had high levels of demand until recently.
This market trend demonstrated by Central Bureau of Statistics data is consistent with data from the Ministry of Finance chief economist's data and mortgage trends reported by the Bank of Israel.
June 2024 appears to be the watershed month in the market, with the impact of real estate developers buy now pay later offers diminishing, and despite buyers rushing to buy new apartments in December 2024 to avoid the VAT increase, apartment purchases are in decline and the supply of apartments is rapidly increasing. Since June 2024, the data show that each month the number of new apartments sold decreased by about 3% from the previous month.