Housing Market Experiences Historic Downturn in 2023

By Aryeh Stern

The Israeli housing market faced unprecedented challenges in 2023, marking the worst year in the past 30 years for sales, according to a survey by the Finance Ministry chief economist. The final quarter of the year, particularly December, saw a small uptick in deals compared to November, attributed to special offers by real estate developers. In December 2023, 6,088 homes were sold, a 15% decrease from the same month in 2022 but a 47% increase from November 2023. Despite this uptick, December recorded the weakest housing sales for the month in Israel since the beginning of the century.

A notable aspect of December 2023 was the increased sales by development and building companies, totaling 2,782 homes. This figure was 10% higher than the monthly average in the first eight months of 2023, suggesting optimism in the real estate market. However, the chief economist expressed skepticism about this optimism, attributing it more to aggressive marketing campaigns by developers. The analysis of contractors’ sales indicated that the highest relative number of deals occurred on the last day of the year, Dec. 31, with a focus on boosting financial performance as the year closed.

The Central Region led the sales of real estate developers in the open market on Dec. 31, accounting for 20% of overall sales for the month. Cities such as Petach Tikva, Kiryat Ono, Ramat Gan, Givat Shmuel, Or Yehuda, and Bnei Brak experienced significant growth rates compared to December 2022, driven by major marketing campaigns and eased payment conditions. While these efforts improved the data for the month, the overall housing market in 2023 faced historic challenges, with the Gaza war and high-interest rates contributing to a 33% decrease in the volume of residential market deals in the fourth quarter, marking one of the worst years for Israeli real estate since the early 1980s.