Prof. Avi Simhon, economic adviser to the Prime Minister and Chairman of Israel’s National Economic Council, said he believes housing prices in Israel will continue to decline in the near future. Speaking at the Israeli Building Center Conference held at the Dan Hotel in Eilat, Simhon stated that after correctly predicting a recent drop in prices, he now expects the trend to deepen. “A few months ago I said apartment prices would fall, and I was right — they went down by 2.5%. I don’t usually make forecasts, but I believe this is what will happen. I estimate prices will decline by 10% over the next year and a half,” he said.
Simhon’s comments come amid a challenging period for Israel’s real estate market, shaped by high interest rates, weaker demand, and a slowdown in property transactions. Industry professionals note that even when developers receive building permits, they do not always move forward immediately due to expensive financing conditions and uncertainty regarding sales pace and profitability.
In a broader economic context, Simhon addressed the financial impact of the war, emphasizing its heavy cost in both human lives and public spending. According to him, the government faced a difficult decision and ultimately chose a budget framework targeting a deficit of 3.9%. Simhon argued that this figure is relatively moderate when compared with countries like France, the UK, and the US, even though those nations did not experience a war. He added that Israel views this deficit as temporary and expects it to decline.
One of Simhon’s key points focused on mortgage assistance and subsidy programs. He explained that his proposal to subsidize mortgage payments faces automatic opposition from the Ministry of Finance and the Bank of Israel, as well as legal concerns related to equality principles. Still, he described mortgage relief as critical for hundreds of thousands of Israeli households. He provided an example of an average family whose monthly payment rose from around NIS 5,000 in February 2022 to approximately NIS 6,300 by April 2023. Simhon warned that such increases represent a severe blow to families, and not only on a social level: when mortgage payments rise sharply, consumption drops — harming the overall economy.
Other speakers at the conference addressed the future of urban development. Jerusalem Mayor Moshe Lion said that urban renewal and Pinui-Binui projects are essential for Israel and especially for Jerusalem, noting that this development model prevents construction on open green areas. He added that demand remains strong, claiming that developers are not struggling to sell in Jerusalem, and emphasized the city’s goal of increasing office construction rather than converting offices into residential apartments.
In Tel Aviv, City Engineer Udi Carmeli said the main issue is no longer permits but actual project implementation. He described Tel Aviv as undergoing a major transformation through large-scale renewal projects that create significant difficulties for residents. “Tel Aviv is going through open-heart surgery and still has to function,” he said, highlighting the complexity of urban development in a living, active city
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