Three Times the Market Stalled and Sellers Who Waited Won. This Time May Be Different

Every seller in Israel right now is being told to lower their price. Before we get to whether they should, we want to say their instinct to hold is not necessarily stubbornness. Let’s face it — that instinct has been correct for fifteen years.

Israel’s market has stalled three times in that period, and each time it’s the same story.

In 2011, after the summer’s “price of cottage” protests, transactions fell 17% from 104,057 to 86,440. Prices rose 4.0% anyway. Two years later, volume reached roughly 111,000, the strongest year of the decade.

In 2015, the 8% investor purchase tax increase almost removed investors completely from the buyer pool. Investors went from 32.8% of all purchasers to 18.7% in 6 months. Prices still rose by 7.9%.

In 2020, lockdown knocked second-quarter transactions down 26%. Prices rose 4.0%. Then 2021 blew up with 150,800 sales, an all-time record.

The pattern is consistent enough to look like a rule: volume freezes, prices hold, then comes the surge in sales and an increase in pricing. Across the whole 2010–2023 period only two years finished negative on the official index: 2018 at −0.8% and 2023 at −1.0%.

So a seller who cut hard in any of those stalls sold cheap immediately before a recovery. When your agent suggests a serious reduction and something in you says no, that instinct has fifteen years of evidence behind it.

We are not going to pretend otherwise. We are going to explain why we think this time may not follow that pattern.

Three things that may mean we are headed for a downturn or at least a prolonged sales freeze:

1.        Prices are genuinely falling. The index published on 14 August, covering May and June, is down 1.5% over twelve months. The Center district is down 4.1%. That has not happened in a stall before. In 2011, waiting cost a seller time; this year, across much of the country, waiting has cost roughly 4% of the asset. Jerusalem is the exception, up 1.8%, and Jerusalem sellers should know that. But Jerusalem also holds the largest unsold new-build inventory of any city in Israel.

2.        The dollar. The shekel was 3.60 to the dollar for most of the last decade. It closed at 2.95 on August 17th. A 6 million shekel home that cost a foreign buyer $1.67m now costs $2.03m. Same apartment, same shekel price, $367,000 more! Foreign buyers borrow up to half, so much of that lands on the down payment. Your price didn’t change. Their ability to pay it did.

3.        New construction. Fifty-seven percent of new-build contracts signed in May and June are “on paper,” with delivery two or more years out. Many are 20/80 deals. The buyer puts down 20% (sometimes even 10%) and stays in their current home until the new one is ready. Many of those buyers are sellers who have not yet listed. They are coming, and they will be competing with you.

Underneath the monthly headlines, nothing is moving. Free-market transactions in June 2026 came to 7,550. In June 2024: also 7,550. Two years, no change.

None of this is a forecast that prices will fall further. Currencies move both ways and every stall so far has ended. It is a warning that the two outcomes now on the table could be a longer stall or a real decline, something no one is used to here.

Which kind of seller are you

This matters more than any market data, because the right answer is different for each.

If you want to sell but don’t have to — i.e. you’d like another room, or you’re ready to downsize, or the mortgage is heavy but manageable — you have the luxury of waiting, and history is on your side. Unless you’re in an endless construction zone where they’re going to be building multiple new buildings with new unforeseen future competition: take the property off the market deliberately rather than letting it sit and get stale for nine months.

If you own a second property, and the yield isn’t great, keep renting it. Rents are the strongest thing in the Israeli economy right now: new tenants paid 4.7% more in the July inflation figures.

If you have to sell — i.e. you’ve bought elsewhere, a delivery date is coming, the mortgage genuinely doesn’t work — then here are my thoughts:

Don’t salami slice.

Most sellers are afraid of a major price decrease at once, and in the hopes of a better market in the near future they cut prices by almost laughably thin margins.

The home lists at 5.8 million. Little to no viewings or interest. Two months later it becomes 5.75. Then 5.69. Then 5.63. Each cut is small enough to feel prudent and small enough that the market never notices. Meanwhile the three or four comparable homes nearby are doing exactly the same thing, on roughly the same schedule.

That is not a pricing strategy. It is a race, and everyone in it is losing at the same speed. Nobody ever becomes the obviously attractive option, because everyone is always 100,000 shekels behind wherever the market has just moved to.

This is measurable. Yad2 data for January to May shows one in five resale sellers had already cut their asking price, by an average of 4.2%.

Unfortunately, Israel publishes no official time-to-sell statistic. I can speak regarding our own inventory — homes we used to sell in two to three months now take six to eight months to move. Six extra months is six more mortgage payments, six more months potentially carrying a second property, and six more months for your competition to undercut you again.

One and done!

If you have to sell, make one reduction large enough to move you clearly below the comparable set, and do it early rather than after the fifth slice.

A seller asking 3.2 million because the neighbour got 3.0 million in this market can end up at less than 2.8 million eight months later. The same seller who priced at 2.9 million on day one would have sold in the first two months and quite possibly for more, because a property that draws multiple buyers in its first weeks negotiates from strength, while one that has been sitting for half a year negotiates from weakness. Everyone can see how long it’s been on the market.

Yes, if the market turns quickly you will have sold for less than you might have. That is a real risk. But you are in this category precisely because you cannot wait for that to happen.

When a home nearby sells for a number that seems impossible, it almost always had something a specific buyer needed. It was a stand-out sale. And I understand everybody thinks their property has that “it” factor, but with so many buyers on the fence and so many more properties on the market, it’s harder and harder to distinguish yourselves from the competition. Often a single outlier is a nice story, not a benchmark, and pricing to it is the most common way sellers end up in the slicing cycle.

Of course it is easier to write than to practice. We are currently marketing a four-bedroom apartment in a strong Jerusalem location at roughly 10% above where the comparable set sits, with three or four similar homes competing directly. We have had very few showings and even fewer offers. Our reading is that it is now likelier to sell 10% below original market than the 2–3% below, which I believe we would have gotten had we made the right price reduction sooner. But of course the seller makes that call, not us, and that’s how it should be. Hopefully you’re reading this Mr. and Mrs. Seller — regardless, as we all say, no one is a prophet and only time will tell what happens to this market.