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How much does it cost to buy a house in Israel?

The Israeli housing market is an exciting place to buy or invest. While housing costs are known to be high across the region, there is still diversity and variation in terms of how much can get you what across the country. To learn about average housing prices, and what affects them, read on.

Can we expect a drop in housing prices?

For buyers anxious to purchase a property in a big city, but worried about costs – lucky you. Bank Leumi analyst Alon Cole Krise projects that in 2023 housing prices in Tel Aviv real estate and Jerusalem properties will begin to stabilize, and may even drop slightly.

For potential buyers, this is excellent news. Both markets are known to be expensive, meaning many new and young buyers have been effectively locked out of the property market in either city.

Of course, these are only projections. It is impossible to know what will actually happen in the future. For more information, click here>>>

Average house prices across the country

The average cost per square meter of three highly popular Israeli cities are recorded in the table below.


Average Cost per Square Meter in City (NIS)

Average Cost per Square Meter outside of City




Tel Aviv Yafo






The trouble with data of this sort is that it fails to take into account the minutiae that affect property prices. In Jerusalem’s elite German Colony neighborhood, for example, an updated apartment can go for over fifty thousand shekel per square meter – a full ten thousand over the city average.

It also may not take into account the difference in the quality of life in different areas. The extra ten thousand shekels per square meter may well be worth it for your dream home, in an area that perfectly suits you.

What affects housing costs in Israel?

● Supply. As in any economy, supply vs demand is the rule that determines housing prices. Israel has a low supply due its small amount of land, but don’t fear – a large number of new properties are built every year, largely thanks to the government’s Tama 38 project. These new properties will hopefully offset the high demand and increase supply, while providing you with a choice of high-quality properties suited to modern life and in high-demand areas.

● Local area and government. In Israel, certain areas may be coveted or avoided according to their local characteristics – including the government.

● Transportation. It may seem strange to Americans who are used to well-connected roads and view hour-long commutes as normal, but the availability of good transportation can be a real deal breaker to local buyers. With jobs concentrated so tightly in the big cities, many people are reluctant to buy in remote areas. But this is changing – first, a mass project to improve the transport system will make more and more areas well-connected within the next decade. Second, the post-pandemic world has led many to crave a slower pace of life and part-time or work-from-home options are increasingly more available.

Tax, fees, and hidden costs: how to calculate the real cost of a house in Israel

  1. Price of House. We can’t tell you how much this should be – it depends too strongly on the property’s city, area, quality, and so much more. It also depends, of course, on your budget, instincts, and preferences regarding the property you choose.

  2. Property Tax (Mas Rechisha). This varies wildly based on your status – foreign, citizen, or new immigrant – as well as whether it’s your only home in the country. A foreigner may be expected to pay up to three times the amount a new immigrant might.

  3. Legal Fees. All property purchases are done through lawyers in Israel – there is no way to avoid legal fees. This starts from about 0.5% of the purchase price. To be cautious, you can factor it in at about 2% – this would reflect the upper end of the price plus VAT. If the property is new, you may also be expected to cover the developer’s fees (this tends to be around 5,000 NIS on top of your personal fees).

  4. Estate Agent. The top end of the spectrum for this fee is about 2%.

Things you may need to take into consideration on top of this include property appraisal fees, and variable costs relating to transaction fees, currency exchange, inflation and mortgage rates.


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