Tel Aviv prices surge over 110% since 2012, creating housing crisis

In Tel Aviv, Israel, a staggering increase in real estate prices has occurred since 2012, leading to a significant affordability crisis. By March 2025, the average apartment price had risen to ₪4.82 million, with costs reaching ₪59,200 per square meter. This sharp rise is attributed to a combination of factors, including rigorous zoning regulations, a booming tech sector, and a growing demand for housing in a densely populated area. Notably, housing costs in Tel Aviv have surpassed those in several major international cities, placing the city eighth in the world for real estate prices. The rapid surge in property values has been accompanied by annual increases of 11.2%, forcing many working families out of the housing market. The overwhelming financial burdens on buyers have been exacerbated by recent government tax policies, which have increased VAT on new homes to 18% and raised municipal property taxes significantly, particularly in Tel Aviv. The situation has resulted in average housing costs exceeding 15 times the average Israeli salary, leaving many residents struggling to secure homes. Moreover, the current real estate market shows signs of dysfunction, with nearly 80,000 new apartments unsold across Israel, amounting to almost two years of housing supply, and a dramatic drop in apartment sales noted in January 2025. Only about 8,000 apartment transactions occurred that month, leading to an alarming 50% decline from December. The extremely high mortgage costs further discourage potential buyers, with average interest rates for housing loans reflecting the increased cost of living. While banks previously offered