Jerusalem Mayor Moshe Lion has a message for anyone weighing whether to buy an apartment now: don't.
Asked in a recent interview with Srugim whether it is advisable to buy now or wait, Lion was unequivocal. Logic says wait a year or two and prices will drop, he said. He explained that developers currently hold margins that allow them to cut prices, and added that he believes housing prices certainly will not rise in the coming years.
In a word-association exercise at the end of the interview, given the phrase "housing prices," Lion answered with two words: will drop.
He was careful about the scale of it. As an accountant, he said, he is telling us this will not continue, and in his view prices will move in a downward direction. This is not a collapse, he said. It is a matter of declines and price moderation.
The Data Behind Him
Lion's forecast is not a lone prediction. It describes a correction that is already well underway.
Central Bureau of Statistics figures show apartment prices fell 1.0 percent in the April to May 2026 reading compared with the preceding two-month period, the largest such drop in eight years. Measured against the same period a year earlier, prices were down 2.0 percent, which the CBS noted is one of only a handful of periods in the past decade to record an annual decline, following drops in 2018 and the second half of 2023.
The pattern has held. Prices have fallen in nine of the last twelve months, and every two-month reading published in 2026 has shown a year-on-year decrease. The most recent reading, covering May to June, showed a marginal monthly rise of 0.1 percent while remaining 1.5 percent below the level of a year earlier.
Average prices tell the same story. The national average stood at roughly NIS 2.33 million in the first quarter of 2026, down from about NIS 2.37 million in the final quarter of 2025, a fall of 1.6 percent.
The decline is not evenly distributed. In the April to May reading, prices fell 2.3 percent in Tel Aviv and 1.8 percent in Jerusalem, 0.5 percent in Haifa and 0.3 percent in the north, while the central and southern districts were unchanged. On an annual basis the steepest falls were in the central district at 3.2 percent, followed by Haifa at 2.6 percent and Tel Aviv at 2.5 percent. Jerusalem and the north were the exceptions, with slight increases.
Several forces are pushing in the same direction. The Bank of Israel has cut its key rate four times since November 2025, most recently to 3.5 percent in July. Developers are sitting on a record supply of unsold new housing. And the shekel has strengthened sharply against the dollar, which has raised the effective cost for overseas buyers even as local prices fall.
The Longer Problem
None of this undoes the arithmetic that put ownership out of reach in the first place.
Research from the Shoresh Institution for Socioeconomic Research found that between 2000 and 2022 apartment prices in Israel rose roughly 130 percent while net household income grew only about 45 percent. Rents climbed around 40 percent over the same period.
The study identifies two structural failures. Households are forming faster than housing is being built, and the housing that does get built does not match the population it is meant to house. Over the past decade only about 16 percent of new apartments were small units of two to three rooms, even as demand for exactly those units grew.
For young religious-Zionist families the squeeze is particularly tight, with the practical choice often being between prices in Jerusalem and the center and a move to the periphery. Even Kiryat Gat, increasingly discussed as a future hub for Haredi and religious-Zionist families, remains a stretch for many.
Rabbi Yaakov Ariel, the former chief rabbi of Ramat Gan, put the frustration bluntly at a conference on Rabbi Kook's teachings several years ago. You need to be a millionaire to get an apartment, he said. Two rooms in Ramat Gan, three million. You can go to a settlement, but even there you can no longer get a decent apartment.
He aimed his sharpest words at his own community. Where are we, he asked, and why are we not carrying the banner of society at the forefront. He noted the standard objection that summer Saturday night protests begin before Shabbat ends, and dismissed it: are there no other days of the week, and can protest tents not be set up.
On the policy side, promises have outpaced delivery. Yitzhak Goldknopf, who served as construction and housing minister from 2022 until his resignation in June 2025 over the Haredi draft law, said on entering office that the government had an obligation to all young couples from every sector, without distinction of religion, race or outlook, that it would not be sectorial, and that the housing problem is shared by everyone. Haim Katz has held the portfolio since, confirmed by the Knesset in September 2025.
Whether the current decline is the beginning of a real reset or a pause driven by high rates, war and a strong shekel is the question Lion is effectively betting on. His answer is that developers have room to cut and will have to use it. The data has been moving his way for the better part of a year.
