The real estate sector is going through a challenging period, yet the right solutions are within reach. They start with easing regulations, continue with a broad macroeconomic perspective, and rely on bold leadership that looks forward rather than acts out of inertia.
Today, as families in Israel struggle to reduce wealth gaps, developers navigate bureaucratic mazes, and construction costs continue to rise, it is clearer than ever that the problem is not a lack of demand, but a lack of ability (or willingness) to meet it. To restore responsible growth to the sector, a combination of smart economic decisions, precise planning, and collaboration among all players-both private and public-is required.
Over the past two years, the sector has experienced an unusual slowdown: rising construction costs, high interest rates that burden buyers and homeowners, extended project timelines, and more. All of these have created a new reality of sectoral risk, undermining the foundations on which the market has relied for over two decades.
When there is no long-term planning and no clear priorities from the government and regulatory authorities, a dangerous vacuum is created: events “sort themselves out” – but are not truly managed. The public pays the price, and developers lose operational space in a sector that becomes increasingly complex and risky.
At the same time, it is important to note that non-bank entities are at the forefront of providing creative solutions adapted to the challenging reality. They are the ones enabling developers to continue operating with flexibility and out-of-the-box thinking-a mindset the market needs more than ever.
The situation on the ground is complex: citizens want to buy apartments, developers want to build and develop, yet conditions do not allow either side to safely fulfill their goals. Many in the sector now agree that the main threat is not necessarily falling prices, but a complete standstill-a situation in which the existing housing stock is stuck on the shelf, and even new construction starts become impossible. Under these conditions, when the state does not provide the necessary support, responsibility shifts to market players, including financial institutions, which must maintain momentum and prevent the sector from freezing.
The Key to Jumpstarting the Sector
A stagnant market does not need fear-it needs oxygen. To restore movement, several key steps must be taken:
• Starting to reduce interest rates – a move that will restore access to credit and ease the burden for homebuyers.
• Lowering the down payment requirement for a first apartment – from 25% to 20% or even less, subject to proper underwriting; a step that can bring young couples closer to the dream of homeownership.
• Extending mortgage terms to 40 years – a move that aligns with the reality in which the average salary no longer matches housing costs.
The common denominator of these measures is a worldview that understands that financing is no longer just a “banking product,” but a socio-economic lever that enables the economy to move forward, eases family burdens, opens opportunities for developers, and creates a market that can breathe again.
Ultimately, the real estate sector is not just about numbers. It touches real lives: couples waiting for their first apartment, families seeking stability, developers who want to build, and an economy with enormous growth potential. Reaching this point requires creativity, responsible leadership, and broad cooperation. Just before stagnation becomes the norm, this is the opportunity to change course and bring oxygen back to the market.