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A devastating 11.2% annual spike in Tel Aviv real estate prices has pushed the Israeli metropolis into eighth place worldwide for housing costs, creating an affordability crisis that is forcing ordinary working families out of homeownership.
With homes averaging $18,469 per square meter, Deutsche Bank’s “Mapping the World’s Prices” report placed Tel Aviv behind Hong Kong ($25,946 per sq m), Zurich ($23,938), Singapore ($22,955), Seoul ($22,875), Geneva ($21,491), London ($20,953), and New York ($18,532).
Israel’s high ranking was attributed to its “being the capital of a small, but densely populated, country with strict zoning rules and more recently, a booming tech sector.”
The international comparison underscores how severely housing costs have spiraled beyond the reach of ordinary Israelis.
Average apartment prices in Tel Aviv reached ₪4.82 million by March 2025, with the price per square meter hitting ₪59,200, a 12.8% annual increase that has made the average property cost more than 15 times the average Israeli salary.
Deutsche Bank noted that Tel Aviv prices have jumped 110% since 2012, when the average cost was $8,795 per square meter.
Foreign buyers continue driving up luxury prices, accounting for 53% of ultra-luxury transactions above ₪10 million. Government tax policies have added to buyer burdens rather than providing relief.
VAT on new homes rose to 18%, while municipal property taxes jumped over 5% on average and 12% specifically in Tel Aviv. Capital gains taxes are also climbing for higher-income sellers.
Adding to the dysfunction, nearly 80,000 new apartments currently sit unsold across Israel, representing almost two years of supply. January 2025 saw fewer than 8,000 apartment sales, a 50% drop from the previous month.
Meanwhile, mortgage costs remain exceptionally high, with average interest rates for housing loans reaching 3.12% for inflation-indexed mortgages and 4.98% for fixed-rate loans not indexed to inflation.
Rental markets offer little relief, with average monthly rents hitting ₪7,000 and climbing an additional 10-12% expected in the second quarter, according to Israel’s Central Bureau of Statistics
Banks had been offering “balloon loans” allowing buyers to pay just 20% upfront with the remainder due when construction finished, sometimes years later.
However, in May the Bank of Israel officials restricted these arrangements, recognizing they enabled purchases by families who couldn’t actually afford the full costs.