Developers in Tel Aviv are now paying brokers double their normal commission just to close deals. A detailed review of eight residential projects across the city tells a clear story: the market has gone well past cooling. In many buildings nearing occupancy, hundreds of apartments are sitting empty and developers are growing more desperate by the month.
Sales Numbers That Tell a Brutal Story
The data is hard to ignore. Sales in 2025 fell across all eight projects reviewed, compared to 2024, which was itself already considered a weak year for Israel’s housing sector.
At Hagag Group’s Bavli project in northern Tel Aviv, sales dropped by roughly 70% in just one year. At Bonei Hatichon’s development on Bnei Ephraim Street, the company sold 10 apartments in 2024 and only five in 2025, a 50% drop. Of the 46 total units in that building, 31 apartments are still sitting unsold.
Across the wider city, new housing transactions in Tel Aviv fell 33.6% year-over-year in the first half of 2025 alone.
At Africa Israel’s DUO project, which includes 510 apartments, sales technically improved slightly in 2025, with 13 units sold compared to nine in 2024. But with 149 apartments still available and a 2027 planned occupancy date, the picture remains far from comfortable.
The situation at Shikun and Binui’s luxury Weizmann 55 project is even more striking. Only three apartments were sold there in all of 2025, following 14 sales in 2024. More than half the building’s apartments remain unsold, even as occupancy is now roughly a month away.
Buildings Near Completion With No Buyers in Sight
There is a detail inside this slowdown that makes it especially uncomfortable for developers. The problem is not just a slowing sales pace. It is buildings that are nearly ready for residents but still holding large numbers of empty units.
A few years ago, this scenario was almost unheard of in Tel Aviv’s new housing market. Projects used to sell out during construction, not sit half-empty near their completion date.
Prices per square meter are also sliding. Y.H. Dimri’s Yama project in the Sde Dov area launched sales about six months ago and sold 32 apartments, but the average price per square meter has already fallen by 6,000 shekels compared to the price at the end of last year. On a typical apartment in Tel Aviv, that can translate to hundreds of thousands of shekels off the original asking price.
Tel Aviv remains Israel’s most expensive city, with the average price of an owner-occupied home standing at ILS 4,369,100, roughly $1.29 million, in the second quarter of 2025. That price level, combined with high mortgage costs, is keeping a large pool of potential buyers firmly on the sidelines.
Developers Are Doing Whatever It Takes
Brokers who once received about 1% of an apartment’s sale price are now being offered 2%, and in some cases, developers are reportedly open to going even higher. Paying an extra percentage point on a multi-million shekel apartment is not a small gesture.
Beyond higher commissions, developers are piling on financing incentives to attract any buyer willing to sign. According to a Finance Ministry chief economist report, the share of transactions in Tel Aviv that included financing incentives jumped to 37% in December 2025, up from 26% in November and 33% in December 2024.
Here is what developers across the Tel Aviv market are currently offering to move units:
- Broker commissions doubled from the standard 1% to 2% of sale price
- Extended payment plans and lower upfront deposit requirements
- Direct price cuts, including 6,000 shekels per square meter at select projects
- Unofficial off-market discounts, reported as high as 15% to 20% in some neighborhoods
- Luxury upgrade packages and finishing incentives for buyers who commit quickly
But there is a critical wall approaching. As occupancy dates get closer, a developer’s room to keep offering financing deals shrinks fast. The closer a building gets to being ready, the less flexibility remains, and every unsold unit becomes a heavier financial burden.
Why the Market Ended Up Here
This crisis did not happen overnight. It has been building since early 2022, triggered by a rapid rise in interest rates. In March of that year, the Bank of Israel’s base rate sat at just 0.1%. By May 2023, it had climbed to 4.75%, a rise of more than 460 basis points in just over a year.
Mortgage costs shot up sharply. The average monthly repayment per household increased by more than NIS 1,000 in 2025 alone. Buyers started stepping back.
The October 7, 2023 Hamas attack added a layer of security uncertainty that made many potential buyers hesitant to commit to large financial decisions. War, rising costs, and a weakening economy created a perfect storm for the housing sector.
By the end of September 2025, there were 83,920 unsold new dwellings across the country, a 20.3% increase from the same month in 2024. Tel Aviv alone accounts for around 10,800 of those unsold units.
Roni Cohen, CEO and partner at Eldar Real Estate Marketing, described the situation plainly. “You can’t argue with the data. This is really a long wave of stoppage,” he said, noting it began with the 2022 rate hikes and only deepened from there.
The government’s decision to raise VAT from 17% to 18% in January 2025 added more pressure. Municipal property taxes in Tel Aviv spiked by more than 12%. Every added cost pushed more would-be buyers further out of reach.
Investor activity also fell. The number of apartments purchased by investors across Israel dropped by roughly 15% year-over-year in late 2025. These buyers once provided a reliable secondary market for new units, and their retreat has left a significant gap.
Can Tel Aviv’s Housing Market Find Its Way Out?
The Bank of Israel cut its benchmark rate to 4.25% in November 2025, and then again to 4.0% in January 2026. These are the first cuts in nearly two years and represent the beginning of what many expect to be a gradual easing cycle.
But experts are careful about setting high expectations. “A fundamental change in the mortgage market will require a series of interest rate cuts, not just a one-off move,” said Ofer Aharonovich, partner at Eldar Mortgages. Single cuts provide relief in sentiment, but they do not dramatically change monthly mortgage payments for most borrowers.
The Bank of Israel’s own forecasters project the average interest rate to reach around 3.5% by the end of 2026. If that easing path holds and the security environment stabilizes, it could meaningfully improve affordability and unlock demand that has been sitting on the sidelines for years.
Some analysts see the potential for a cumulative price decline of at least 6% to 8% in the coming year if demand does not recover. Others believe the structural shortage of land in Tel Aviv, and the city’s role as Israel’s economic and tech capital, will ultimately prevent a deeper collapse.
Tel Aviv’s housing market spent years as one of the safest investments in the region, with prices rising for nearly two straight decades. What is unfolding now is a long-overdue reckoning, shaped by war, rising debt costs, and years of building far more than buyers could absorb at the prices being asked. For the families who dreamed of owning a home in this city, for the developers who believed demand would never stop, and for the brokers now chasing double fees just to survive, the wait for a real recovery feels personal and painfully long. Share your thoughts in the comments below, and if you know someone navigating Israel’s housing market right now, pass this story along.
