Understanding the Global Economic Climate

Global markets have been in flux. Rising interest rates, inflation, currency volatility, and geopolitical tensions have made investors rethink their strategies. From tech stocks to crypto and even some commodities, volatility has become the norm. In this kind of climate, safety matters more than high-risk returns.

People are moving away from speculative investments and looking for assets that hold real value over time. They want something that won’t disappear with a market crash or be destroyed by inflation. This is where real estate shines — and Israeli real estate in particular.

Why Real Estate Remains a Safe Haven for Investors

Real estate has always played a key role during uncertain times. When markets become unpredictable, people look for assets they can touch and see. A home, an apartment, a piece of land — these aren’t just investments, they’re physical assets with long-term utility.

Unlike stocks or currencies that can lose value overnight, real estate typically moves in a slower, more stable pattern. Even if prices shift, they rarely collapse entirely. This sense of control and security is why real estate is called a “safe haven.”

In Israel, where demand constantly outpaces supply, the real estate market has been especially consistent. People need places to live, and buyers continue to compete for space, even when global uncertainty rises.

Israel’s Economic Stability in a Volatile World

Israel’s economy is more stable than it looks from the outside. It’s driven by high-tech, innovation, and global exports, with the tech sector alone contributing around 18% of GDP and over 50% of national exports (Israel Innovation Authority, 2024). This steady flow of capital supports housing demand and helps keep the broader economy afloat, even when global markets shake.

During recent global downturns, Israel has consistently shown resilience. The country avoided recession post-COVID and maintained solid growth through periods of high inflation in 2022–2024 (OECD Israel Economic Snapshot, 2024). Its banking system remains conservative, with strong capital ratios and limited exposure to high-risk lending (Bank of Israel Financial Stability Report, 2025). Inflation is currently under control — below 3% as of mid-2025, compared to much higher rates in the US and Europe (Bank of Israel Inflation Tracker, 2025).

Unemployment is also low, at around 3.6% in Q2 2025 — one of the lowest in the OECD (Israeli Ministry of Finance Data, 2025). These factors combine to build strong local confidence in the real estate market.

Importantly, demand in Israel is largely domestic. Over 82% of real estate transactions are completed by Israeli residents — not foreign investors — with most purchases made by families and long-term buyers (CBS Housing Market Trends, 2024). That local demand provides a strong foundation under the market, even when external pressures arise

The Unique Nature of the Israeli Real Estate Market

What makes the Israeli market unique is its structure. About 93% of land is publicly controlled, while only 7% is privately owned. There is very limited land available for new construction, especially in central areas such as Tel Aviv and Jerusalem. Only a small portion of Israel’s territory is zoned for residential use, and much of that is managed by national authorities or reserved for agriculture, military use, or protected natural areas (Israel Land Authority, 2024). In major urban centers, zoning restrictions, historical preservation requirements, and dense infrastructure make it extremely difficult to build quickly or at scale (Ministry of Interior – Planning Administration Report, 2024).

This structural bottleneck creates a chronic imbalance: demand continues to grow faster than supply. Israel’s population growth rate — one of the highest in the OECD at 2% annually — adds constant pressure to the housing market (CBS Demographic Statistics, 2024). On top of that, return migration (aliyah) and intergenerational wealth transfers are driving even more local buying, particularly in the central and coastal regions (Jewish Agency Reports, 2024).

Construction is not keeping up. In many urban areas, building permits are delayed for years due to bureaucratic backlogs and complex planning processes. Even where land is available, developers face long timelines to get projects approved (State Comptroller Report on Housing, 2023).

As a result, prices don’t drop easily. Even when there’s market softening, the long-term price trend has remained upward, especially in high-demand cities. Compared to similar urban markets in Europe or North America, Israeli property remains expensive — and resilient. Investors understand this dynamic. It’s what gives them confidence that their assets will continue to hold value over time, even in periods of global economic uncertainty (Bank of Israel Housing Review, 2024).

Investor Behavior in the Israeli Market

Despite regulatory changes and higher taxes for foreign buyers, investors still see Israeli real estate as a reliable long-term choice. The type of investor is changing — fewer speculators, more long-term holders — but the interest is still there.

People aren’t just buying to flip properties anymore. They’re buying to hold. They want something solid in their portfolio. Even foreign investors, who face steeper costs and regulations, still come for the value and security that Israeli real estate offers. Foreign investment has shifted toward prime urban locations, with buyers holding for value preservation, family use, or generational wealth purposes.

Local investors, especially those with family capital or long-term financial planning, also continue to buy. They see real estate as a store of wealth and a hedge against market risk.

Performance of Property Prices During Past Crises

When you look back at the 2008 global financial crisis or the COVID-19 pandemic, Israeli real estate behaved differently than many other markets. Prices didn’t collapse. They slowed. They paused. But then they picked up again.

While other countries saw dramatic drops, Israeli property either held its ground or dipped only slightly. This pattern has repeated again and again. Even in times of tension or war, the housing market has proved durable.

This was true again after October 7, 2023, when the conflict with Hamas led to significant national and global concern. While transaction volume dropped sharply in the months immediately following the outbreak of war — particularly in areas close to conflict zones — property prices in core urban centers like Tel Aviv, Herzliya, and Jerusalem remained stable or only slightly declined (Bank of Israel Housing Review, Q2 2024).
The Ministry of Housing and Construction also noted that while buyer activity slowed, asking prices in high-demand areas did not fall substantially, due in part to limited inventory and strong underlying demand (Ministry of Housing Reports, 2024).

By mid-2024, signs of recovery were already visible. Mortgage activity began to pick up again, especially among first-time buyers and investors focused on long-term value. The construction sector, though briefly disrupted, resumed quickly, and demand rebounded first in central districts, reflecting a return of confidence (CBS Housing Data, 2024).

Part of this is cultural. Part is structural. But the outcome is clear: even in the face of war, Israel’s housing market has shown a level of stability and resilience that few countries can match. This durability reinforces the belief that real estate in Israel is not just an asset — it’s a long-term safeguard

The Strength of the Shekel and Its Influence on Property

The Israeli shekel has remained one of the stronger and more stable currencies in the region. This matters a lot, especially to foreign investors. When your investment is tied to a stable currency, you reduce your exposure to currency risk.

A strong shekel also builds confidence in the market. It signals a healthy economy and sound financial management. These conditions make real estate an even more attractive option for both locals and overseas buyers.

While a strong currency might make buying a bit more expensive for foreigners, many are willing to absorb that cost because the underlying asset — the apartment or home — is still valuable and likely to appreciate.

Cultural and Emotional Drivers Behind Israeli Real Estate

In Israel, real estate is not just an investment. It’s deeply personal. People buy property not only to grow wealth, but to feel safe, connected, and rooted. There’s a cultural pressure to own, and that keeps demand high, even when prices are steep.

Families help their children buy apartments. People invest in homes as part of their identity and future planning. Owning property here isn’t just financial — it’s emotional. That emotional connection makes the market more resistant to panic selling or sudden shifts.

When times get tough, people don’t rush to offload property. They hold on. That’s what helps keep prices stable during uncertainty.

This emotional connection extends beyond Israel’s borders. In the past two years — especially since October 7 — rising antisemitism in North America, Europe, and other regions has played a growing role in motivating foreign Jews to buy real estate in Israel. 

For many, it’s not just a backup plan — it’s peace of mind. Families from cities like Paris, London, New York, and Los Angeles are increasingly looking at Israeli property as a safe, permanent alternative or a place to send their children if needed (Jewish Agency, 2024; Jerusalem Post, 2024). Some are buying for future aliyah, others as a second home, but the motivation is often the same: having a foothold in Israel in response to rising uncertainty abroad. This adds another emotional layer to demand — one that reinforces the long-term value of owning property in Israel.

Challenges That Could Affect Future Investment

There are challenges ahead. Interest rates are higher than they’ve been in years, which makes borrowing more expensive. That could cool demand, especially for younger or first-time buyers.

There’s also more government pressure on the housing market. New policies could affect pricing or slow down speculation. These changes need to be watched carefully.

But even with these risks, the fundamentals haven’t changed. Demand is strong. Supply is weak. And long-term investors are still active. If you plan smartly and focus on core value, the Israeli real estate market still holds strong potential.

Final Thoughts: What This Means for Today’s Investor

If you’re looking for a place to protect your money, grow it slowly, and hold something real, Israeli real estate continues to be a reliable option. It’s not about fast returns. It’s about steady growth, stability, and long-term value.

Smart investors today aren’t just looking at what’s cheap. They’re looking at what holds value in the long run. Israeli property offers that, especially in key urban areas. Even with uncertainty in global markets, Israel’s housing sector remains grounded in real demand.

If you’re considering a purchase, now is the time to do your research, get clear on your goals, and focus on the areas that offer lasting value. As always, long-term thinking is what separates good investments from great ones.

If you’re ready to invest in a lifestyle that brings people together — and a property model that’s built for what’s next — contact Hold Real Estate today