Where Is the Israeli Real Estate Market Heading?

November 25, 2025

Two years of war, high interest rates and labor shortages have created a new reality in the Israeli real estate market.

In recent weeks, signs of change are beginning to appear. Reservists are returning to work, foreigners are renewing their interest, and the local public is beginning to realize that the market, despite everything, is moving again.

In a conversation in the Walla studio, attorney Yossi Musseri, founder of the law firm Musseri, Habbib & Associates, and Dan Weizmann, marketing and sales director at DREAM ISRAEL, tried to understand what is really happening on the ground and whether 2026 will be the sector's year of recovery.

The real estate market is stabilizing after a period of high interest rates and war

Weizmann describes the current situation as a "natural correction" after an unusual period of war and very high interest rates:
"High interest rates really slowed the pace of sales, and the war only reinforced that trend. But you have to understand: after the coronavirus, everyone got used to an abnormal pace. Now the market is returning to a calmer and healthier speed, and that is a positive thing."

According to him, the market is balancing out after a period of war:
"A real estate transaction is a long-term agreement. When we see a slowdown today, it is really a return to normal, not a crisis."

Developers are more prudent, and residents understand that they are true partners

Attorney Musseri, who also works as a developer at the company Multiland, agrees that the market has gone through a strong shake-up, although he maintains that it has also brought benefits:
"Before the war and before the rise in interest rates, developers offered inflated proposals that could not be fulfilled. Today we are returning to reality. We see fewer exaggerated proposals and more responsible agreements, both from developers and from residents."

He adds that owners' understanding has changed:
"Residents no longer chase an extra square meter or an additional parking space. They understand that they are partners in a project that changes lives, not simple customers. There is more collaboration, fewer confrontations, and that brings much better results."

Optimism returns: foreigners are buying, and the BDiCode rating strengthens confidence

Weizmann backs his words from the commercial side and emphasizes that many Israelis, and also residents abroad, are buying homes again:
"Israel today is stronger economically. We have clients from Belgium, France and Switzerland who prefer to move their capital to Israel. They see stability here, falling interest rates and a sense of relative security, and that attracts new investment."

Attorney Musseri recalls that, alongside the recovery, it is important to prepare properly from a legal standpoint:
"We learned from the pandemic and the war that it is necessary to include force majeure, war or stoppage clauses in every contract. This gives protection to both the developer and the buyer even in exceptional times, and allows the project to continue without being halted."

Both refer to the importance of the CofaceBDi reliability rating, which serves as an indicator of stability in the sector:
"When a company is rated by BDiCode, that gives clients a real sense of security," says Weizmann. "The rating reflects financial strength, credibility with the banks and the ability to execute, and that makes owners feel safe joining a project with us."

Attorney Musseri adds:
"You could say that CofaceBDi is the 'Yad2' of the business world. It is the seal that says you were assessed, you were checked and you were found to be stable. Clients look for that above all."

"With falling interest rates, the end of the war and a renewed understanding between the parties, there is room for cautious optimism. Prices are not going to soar, but demand will return. The Israeli real estate market knows how to recover, and it is already on its way," concludes attorney Yossi Musseri.

For your next investment in Israel, we advise you to contact J&G Real Estate Group today.
Schedule a 30-minute meeting, at no cost and with no obligation.

Jacki Wiluzanski ג'קי ווילוזנסקי

Owner, Real Estate Broker

Jerusalem Chamber of Real Estate Brokers

Selling/Buying property? Real estate fee is 2%+vat

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