684 homes were bought in Jerusalem by foreign residents in 2025, according to a survey published last week by the Ministry of Finance senior deputy to the chief economist Galit Ben Naim. In Tel Aviv foreign residents purchased 186 homes last year, in Netanya 169 homes and in Beit Shemesh 137 homes. This is no big surprise. Jerusalem is considered a major center of demand for foreign residents, with purchasing an apartment in the city being seen not only as a real estate investment but also as an identity anchor.
However, in recent months the picture has begun to change. The appreciation of the shekel against the US dollar by about 20% since the beginning of 2025 is dampening demand in the capital, and real estate agents in the city are reporting a slowdown in transactions, especially in neighborhoods that are aimed at foreign residents. All this is happening while Jerusalem currently tops the list of new unsold apartments, and at the same time, apartment prices have begun to fall.
18% decline in purchases by Americans in March-April 2026
The cooling in demand from US non-residents began becoming apparent at the beginning of 2026, but in recent months it seems that the negative trend is gaining ground. Ministry of Finance data show that in March 2026 there was an increase in the number of apartments purchased by Americans compared with last year (84 compared to 65), but at the same time there was a decrease in the relative share of Americans in total purchases by foreign residents, from 53% to 49%. The Ministry of Finance notes that one of the main explanations for this is the weakening of the dollar against the shekel, which affected the viability of transactions for Americans.
The decrease in demand for apartments by foreign residents was particularly noticeable in Jerusalem. More than half of American purchases in Israel in the first quarter were concentrated in the capital, but this is a 5% decrease in purchases compared with the same period last year. The trend worsened in the second quarter, when, according to Ministry of Finance data, in March-April there was a sharp decrease of 18% in American purchases in Jerusalem.
Beyond the dry numbers, real estate agents and appraisers who operate in Jerusalem also indicate difficulty in sales to foreign residents in the capital. Attorney and real estate appraiser Kobi Bir, whose activities focus on Jerusalem, says that the strengthening of the shekel against the dollar actually translated into an increase of about 20% in apartment prices for US buyers. "There is a clear sense of stagnation in the foreign resident market in Jerusalem. It's not that there was a boom here before, the war also had its effect, but there is no doubt that the weakening of the dollar has sharply curbed demand."
Alyssa Friedland, a luxury apartment broker at Remax Hazon in Jerusalem, agrees with Bir: "Six months ago I had four people interested in a luxury apartment in the Talbiya neighborhood, priced at NIS 14 million. Today it's maybe one person interested every two weeks." According to her, the change doesn't only affect the luxury segment: The Baka neighborhood, which is considered popular among foreign residents, is also seeing a decline in transactions. "Today, most of the transactions come from Israeli buyers, while foreign residents are simply sitting on the fence," she adds.
Stagnation in shekels, prices rising in dollars
The decline in demand from foreign residents in Jerusalem comes at a particularly sensitive time for the Jerusalem market, which is already under pressure from high supply. The city currently tops the supply table for new unsold apartments, with over 10,000 apartments awaiting buyers.
At the same time, apartment prices in the capital are also on a downward trend. According to data from the Central Bureau of Statistics, the price of an average apartment in the Jerusalem district reached a peak of about NIS 3.11 million at the end of 2025, but in the first quarter of 2026 it fell by about 5.5% to NIS 2.94 million. In annual terms, this is a cumulative fall of about 20%. In this context, the Ministry of Finance survey shows that purchases by foreign residents in Jerusalem are mainly focused on high price levels, with the median price in the first quarter being NIS 5.1 million.
According to a survey conducted by Matan Shitrit, Phoenix's chief economist, from the perspective of the US buyer, the gap between the price of an average apartment in shekels and its price in dollar terms already stands at tens of percent: "Since the end of the first half of 2024, the price of an average apartment in Israel, according to the Central Bureau of Statistics, has remained almost unchanged in nominal terms. In real terms, by the way, there has already been a decline, and this is even before taking into account the promotions and benefits that support quite a few transactions in the market," explains Shitrit..
In contrast, he says, when those prices are converted into dollars, a completely different picture emerges - apartment prices in Israel in dollar terms have increased by about 27%, as a result of the rapid strengthening of the shekel together with the weakening of the dollar. "To put it into perspective, while the Israeli buyer sees more or less the same average price in front of them over the past two years (about NIS 2.33 million), for a foreign resident the price of an average apartment in Israel has increased from about $630,000 to about $790,000 in the same period. In other words, the Israeli residential market may seem stagnant in shekel terms, but for foreign residents it has risen sharply in price."
Published by Globes, Israel business news - en.globes.co.il - on July 6, 2026.
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