For many months now, the housing market has been in a state of slowdown. The high interest rates burdening mortgage borrowers, the low national morale, and of course, the ongoing “Swords of Iron” war are among the key factors that have brought the market to its current state and continue to weigh it down.
As if that weren’t enough, the already complex reality has recently been further complicated by the Iran war, which is quite literally adding fuel to the fire. However, this very development, under a certain scenario, may actually pull the market out of the slump into which it has sunk. It’s possible that this very security turmoil could lead, once the fighting subsides, to a deep and long-lasting calm - one that could change the rules of the game.
In recent days, the Tel Aviv Stock Exchange has shown upward movement. These gains do not reflect the current situation but rather stem from expectations for a different future - one in which the threat from Iran and its proxies is removed, thereby dramatically lowering Israel’s risk premium. The logic is simple: when the sense of risk diminishes, confidence in growth increases, especially in long-term investments such as real estate.
Such a scenario could lead to a significant shift in the overall economic atmosphere. If we add to this the possibility of a hostage exchange deal that would end the fighting in the Gaza Strip, we may indeed be on the brink of a new Middle East. A state of euphoria like this could certainly create a positive momentum that would lead to a renewed boom in the economy as a whole - and in the real estate sector in particular. From this perspective, the current gloom may turn around more quickly than it seems - just as often happens following security crises in Israel.
On the other hand, a prolonged war could eliminate the chance for this optimistic scenario and leave the economy in a state of prolonged uncertainty. Delays in projects, hesitation from buyers and developers, and reluctance from foreign investors - all of these could become the new daily reality.
Israel’s housing market now stands at a crossroads - between continued stagnation and a surprising breakthrough. It may be that the dramatic events of recent months are precisely what will eventually spark a general awakening. Then again, as is always the case in real estate, it's not just about the data - it’s about perceptions, expectations, and above all, trust. Time will tell whether the euphoria scenario materializes, but one thing is already clear: whoever correctly identifies the deep trends will be at least one step ahead of the market.