Apartment Prices Are Cooling, but Getting Into the Market Is Becoming More Expensive Again: The New Catch for Israeli Homebuyers

After a period in which Israeli homebuyers finally appeared to be getting some breathing room, new data suggests that the picture is more complicated. Apartment prices are no longer rising at the pace seen in previous years, financing conditions have improved somewhat from their peak, yet the amount of equity buyers need to bring to a transaction increased again in the second quarter of 2026.

 

According to the Housing Affordability Index published by the Alrov Institute for Real Estate Research at Tel Aviv University, the average equity required to purchase a four-room apartment increased by approximately NIS 30,000 during the second quarter, reaching around NIS 1.38 million. The average monthly mortgage payment also edged higher, reaching approximately NIS 10,864.

 

What makes the figures particularly interesting is that compared with a year earlier, the situation is still better. The required equity remains approximately 9.5% lower than in the corresponding quarter of 2025, while the average monthly mortgage payment is about 4.8% lower.

 

In other words, this is not a full return to the previous peak. Rather, it may be an indication that the improvement buyers experienced in recent months has at least temporarily stalled.

 

And this is perhaps the most important story in the Israeli housing market right now: the price of the apartment itself is only one part of the affordability equation.

 

A buyer can read a headline saying apartment prices are falling and assume that home ownership is becoming easier. In practice, affordability also depends on interest rates, how much financing the bank is willing to provide, household income and, crucially, how much cash the buyer can bring to the transaction.

 

The gap becomes even more apparent in high-demand areas. According to the index, households looking to purchase homes in many major cities in central Israel still need more than NIS 700,000 in equity if they want to keep mortgage payments at a level considered reasonable relative to income.

 

In Tel Aviv, the challenge is on an entirely different scale, with the estimated equity requirement in the index reaching approximately NIS 2.76 million.

 

It is important to put these figures in context. They do not represent what every Israeli buyer will actually pay. The index examines a typical four-room apartment across 12 cities, assuming 70% financing and a 25-year mortgage.

 

Precisely because the methodology remains consistent, however, it provides a useful indication of how home-purchasing ability changes over time.

 

Transaction volumes tell another interesting story. Around 6,461 four-room apartment transactions were recorded in the sample during the second quarter, almost unchanged from

both the first quarter and the equivalent period last year.

In other words, the market is not collapsing, but it is not moving forward quickly either.

 

Bank of Israel data points in a similar direction. During the second quarter, household demand for housing credit stabilized, while banks reported weaker demand for credit from the construction and real estate sectors.

The result is a housing market increasingly defined by a waiting game. Some buyers are holding out for further price declines or better financing conditions. Developers are looking for ways to bring buyers back into sales offices, while banks continue to carefully assess borrowers' repayment capacity.

 

That means the most interesting question in the coming months may no longer be simply, "Will apartment prices fall?"

 

The more practical question is: even if they do, will Israeli households actually be able to afford to buy them?

Source: Tel Aviv University's Alrov Institute for Real Estate Research Housing Affordability Index, as reported by Calcalist on September 7, 2026, together with Bank of Israel data for Q2 2026.