Cooling Real Estate Market: Investors Feel the Pinch

Strategic Insights -

Investors who bought cheap apartments, mostly in the south, are among the first to feel the change in the atmosphere in the real estate market, according to the Ministry of Finance chief economist's first quarter survey of the residential real estate market. The survey found that there was a noticeable increase in the number of apartments that investors sold in the first quarter of this year, compared to both the preceding quarter and the corresponding quarter of 2024. This raises the possibility that investors felt that the increase in apartment prices had exhausted itself, and the market is set for declines.

Key Takeaways:

  • Over 10% of real estate investors who bought cheap apartments in the south, especially in Beersheva, have been affected by the market changes.
  • In six out of ten tax districts, there was an increase in apartment sales by investors, suggesting that investors may have felt that apartment prices had peaked.
  • Approximately 11% of apartments sold by investors resulted in a real capital loss for the sellers.
  • The Southern Region recorded the highest rate of sales at a loss, with 21% of homes sold by investors being sold at a real capital loss.
  • In the Tel Aviv District, 7% of sales resulted in a real capital loss for investors.
  • Beersheva, Eilat, Kiryat Gat, Kiryat Ata, and several cities from the Tel Aviv area had high rates of investor losses.
  • Cities like Rehovot, Givatayim, Hod Hasharon, Nesher, Afula, and Nahariya had no apartments sold at a real capital loss.

Statistics:

  • 11% of apartments sold by investors resulted in a real capital loss for the sellers.
  • 21% of homes sold by investors in the Southern Region were sold at a real capital loss.
  • 7% of sales in the Tel Aviv District resulted in a real capital loss for investors.
  • Foreign residents purchased 433 apartments in the first quarter of 2025, a 37% increase from the preceding quarter but a 12% decrease from the first quarter of 2024.
  • The number of apartments purchased by foreign residents since the outbreak of the war has increased, but this is still a very low volume, constituting about 2% of all transactions in the market.

Sources:

  • "Ministry of Finance chief economist's first quarter survey of the residential real estate market" (no date specified).
  • Globes, Israel business news en.globes.co.il (September 4, 2025).