Tel Aviv Now 8th Most Expensive City for Housing Globally, Report Finds
Tel Aviv’s real estate market, now the eighth most expensive globally, faces an affordability crisis as prices soar 11.2% annually, driven by a booming tech sector and foreign investment. Government tax hikes, high mortgage rates, and a surplus of unsold apartments exacerbate challenges for local buyers, with rents also climbing sharply.
Tel Aviv has surged to eighth place among the world’s most expensive cities for housing, driven by an 11.2% annual price spike that has deepened Israel’s affordability crisis. According to Deutsche Bank’s 2025 “Mapping the World’s Prices” report, Tel Aviv’s average home price per square meter reached $18,469 (₪62,237), trailing only Hong Kong ($25,946), Zurich ($23,938), Singapore ($22,955), Seoul ($22,875), Geneva ($21,491), London ($20,953), and New York ($18,532). The report attributes Tel Aviv’s high ranking to “being the capital of a small, but densely populated, country with strict zoning rules and more recently, a booming tech sector.” By March 2025, average apartment prices in Tel Aviv hit ₪4.82 million, with the price per square meter climbing to ₪59,200, a 12.8% annual increase, making homes over 15 times the average Israeli salary, severely pricing out working families.
Foreign buyers, particularly from the U.S., France, and the UK, fuel the luxury market, accounting for 53% of transactions above ₪10 million, driven partly by rising global antisemitism prompting Jewish diaspora investments. Since 2012, Tel Aviv’s prices have soared 110% from $8,795 per square meter, outpacing income growth. Government policies exacerbate the burden: VAT on new homes rose to 18% in January 2025, municipal property taxes in Tel Aviv jumped 12%, and capital gains taxes increased for high-income sellers. Despite a record 80,000 unsold new apartments nationwide, representing two years of supply, sales plummeted, with January 2025 recording fewer than 8,000 transactions, a 50% drop from December 2024’s rush to beat tax hikes.
Mortgage costs remain punishing, with inflation-indexed loans at 3.12% and fixed-rate, non-indexed loans at 4.98% in May 2025, per Bank of Israel data. The Bank’s May restriction on “balloon loans”, which allowed 20% down payments with the rest deferred until construction completion, aimed to curb risky purchases but further strained affordability. The rental market offers no respite, with Tel Aviv’s average monthly rent hitting ₪7,000 and projected to rise 10-12% in Q2 2025. In sought-after areas like Neve Tzedek, rents average ₪18,200. Posts on X reflect public frustration, with one user noting, “Tel Aviv’s prices are insane, how can young families even dream of owning a home?” Israel’s tech boom and population growth of 1.6% in 2024 continue to drive demand, but experts warn the oversupply and high interest rates may temper price growth by late 2025.