Foreign Buyers Fuel Record Mortgage Surge in Israel's Housing Market

The Israeli housing market has seen a remarkable uptick in foreign residents purchasing apartments, culminating in an all-time high in mortgage activity for December 2024. The total amount of mortgages taken in December reached a staggering NIS 13.8 billion, with a significant portion of the activity driven by foreign buyers, particularly those from religious Jewish communities seeking homes in Jerusalem.

Following the outbreak of the war, foreign residents have been actively purchasing properties in Israel, reversing the downward trend seen over the past decade. While foreign residents still represent a small fraction of the total housing market, their presence has increased by 50% compared to 2023, with an estimated 1,900 apartments purchased in 2024. This surge is due in part to a rush to beat the impending VAT hike, leading to an increase in the volume of mortgages, especially among buyers of apartments priced between NIS 2-3 million.

Jerusalem has become the focal point for foreign buyers, particularly those from the haredi and orthodox communities. Unlike past trends where Tel Aviv and its surrounding areas were the top choices for foreign buyers, Jerusalem has seen the bulk of the purchases in recent years. Notably, the city's luxury market has been highly sought after by foreign residents, with 22 apartments sold for over NIS 10 million in just November and December 2024.

A notable shift in buyer demographics has been observed, with the majority of foreign residents coming from the United States, England, and France. Many American and British buyers prefer to secure a property in Israel as an investment or for added security, while French buyers are increasingly making the move to Israel due to rising anti-Semitism in Europe.

Increased Mortgages for New Apartments

The surge in foreign resident mortgage activity has primarily been focused on new apartments, with many buyers opting for loans in the final months of 2024 to avoid the VAT hike in 2025. These buyers have primarily targeted luxury developments, many of which are in Jerusalem, where the real estate market has become a haven for those looking for a secure investment in uncertain times.

According to Kobi Beer, a Jerusalem appraiser, "Anti-Semitism is rising everywhere, and buyers are coming here from all over," adding that many of these buyers are not rushing to immigrate but want to keep their options open by securing a property in Israel.

Impact of Currency Fluctuations

The shekel, which recently reached its strongest level in two years against the US dollar, weakened sharply in early 2025. This shift in currency trends may have an impact on the affordability of foreign residents purchasing real estate in Israel. According to Poria Financial Planning chairman Or Poria, while the shekel is weakening in the short term, the long-term outlook remains strong, suggesting continued stability in the real estate market.