Despite high interest rates and ongoing security concerns, real estate investors in Israel are gradually returning to the market, particularly in the southern regions. Ori Yonissi, head of the mortgage division at Leumi Bank, notes that these investors see potential for property value increases once the security threats in the area are mitigated.
Since the beginning of the year, housing prices in Israel have risen by about 6%, even as interest rates remain at historically high levels, reducing the appeal of real estate investments. However, since January, there has been a gradual trend of investors re-entering the market. They are particularly interested in southern cities like Dimona, Netivot, Ofakim, and Ashkelon, where prices are still affordable but show promising potential for significant appreciation over time.
Despite the cooling demand in 2023, real estate companies have started offering attractive deals to lure buyers, but it’s not these deals that have brought investors back. Instead, they are buying existing properties or newly completed homes ready for occupancy, rather than participating in pre-construction programs.
The market continues to suffer from a persistent imbalance between supply and demand. According to Yonissi, the shortage of housing, exacerbated by rapid population growth, keeps upward pressure on prices. He estimates that to meet demand, 55,000 new homes need to be built each year, a target the state has yet to achieve, leading to a deficit of over 130,000 homes.
