Why Unsold Inventory Is High Right Now
Israel’s new-home market went through a sharp reversal. After a 44% jump in purchases in the year before, new apartment sales fell 12% in 2025. Construction, however, kept moving. Credit kept flowing. The result: developers are sitting on more unsold stock than at any point on record, while carrying significantly higher financing costs.
Bank of Israel data shows that 44% of projects financed by Israel’s five largest banks had construction progress outpacing sales by end of 2025. That is a large share of the market where the developer is consuming credit faster than revenue is coming in.
One investment manager’s assessment captured the situation precisely: “Companies are building and consuming credit faster than they are selling.”
Interest rates added to the squeeze. The Bank of Israel’s benchmark rate had climbed to a cycle peak of 4.5%, pushing the prime rate to about 6% (it has since eased to roughly 3.75%, with prime near 5.25%, as of 2026). Mortgages became materially more expensive for buyers, which softened demand further and left developers carrying costs with fewer closings.
What Remaining Inventory Actually Tells You About a Project
When a developer has sold 90% of a project, they have cash flow, a healthy margin, and little reason to negotiate. When a developer has sold 30% — and the building is half-finished — their incentive structure looks completely different.
High remaining inventory in a project signals several things at once:
- The developer needs closings to service construction financing.
- The bank funding the project has a shared interest in keeping the project alive and moving.
- The project may have unsold units that have been sitting long enough that the developer is open to creative solutions.
- The developer may be willing to negotiate on elements they would not touch in a strong sales environment.
None of this means the project is bad. It means the buyer has information. And in real estate, information is negotiating power.
The Incentives Developers Are Actually Offering Right Now
The most common tool developers have used to sustain sales through the slowdown is the deferred-payment arrangement, often called an 80/20 or 90/10 deal. Buyers pay 10% to 20% of the purchase price upfront. The remaining 80% to 90% is due only when the apartment is delivered.
These deals shift financing risk onto the developer and give the buyer meaningful time before the large payment is required. For buyers who are not yet mortgage-ready or who need time to sell an existing property, this structure can be genuinely useful.
Beyond payment timing, buyers in projects with high unsold inventory have also been able to negotiate:
- Price reductions or “discounts” framed as upgraded finishes
- Free or subsidised parking and storage units
- Upgraded kitchens, flooring, or fixture packages at no additional cost
- Longer closing periods with locked pricing
- Partial price indexation protection against construction-cost inflation
These extras rarely appear in published price lists. They emerge in conversation, and usually only when a developer senses a motivated, qualified buyer.
How Remaining Inventory Changes the Negotiation by Project Stage
| Project Stage | Unsold Units (Estimate) | Buyer Leverage | What to Push For |
|---|---|---|---|
| Pre-sale / planning | 100% unsold | Moderate — no cash pressure yet | Early-buyer pricing, best floor selection |
| Construction started, 60%+ unsold | High inventory, active credit draw | High — developer needs velocity | Price, deferred payment, extras, parking |
| Construction started, 30–60% unsold | Medium inventory | Medium — room to negotiate specifics | Upgrades, payment structure, closing timeline |
| Construction nearing completion, 10–25% unsold | Low but meaningful | Good on specific units | Unit-specific price, fast closing incentives |
| Completed building, last units remaining | Very low | Strong — carrying cost is real | Significant price flexibility on remaining stock |
The Risk Side of Deferred-Payment Deals
Deferred payment arrangements carry real risks that buyers need to understand before agreeing to one.
When a buyer pays only 10–20% upfront, they are committed to a project that may not be completed for two to four years. If the buyer’s financial situation changes — income, mortgage eligibility, family circumstances — they may not be able to complete the purchase on delivery. Walking away from an Israeli off-plan contract typically means forfeiting the deposit and potentially facing legal claims from the developer.
Equally, the low upfront payment can give buyers false confidence about affordability. The full mortgage approval, at current interest rates and based on the full purchase price, will need to be secured closer to delivery. Rates may be different. Bank criteria may have shifted. Buyers need to model the full payment scenario, not just the upfront figure.
Bank of Israel analysis found that a 58% drop in new-home sales would begin causing losses for banks — that threshold has not been reached, but the margin of safety is narrower than it was in previous years. Buyers should treat a developer’s financial stability as a due-diligence item, not an assumption.
If You Are Actively Looking at New-Build Projects Right Now
The combination of record unsold inventory, rising developer credit costs, and slower sales means qualified buyers with financing clarity have real leverage — but only if they know which projects have it and how to approach the conversation.
If you would like help evaluating your options or have questions about your property search in Israel, reach out to the Semerenko Group team here for a personal, expert consultation.
What This Market Moment Means for Buyers Who Are Ready to Move
- Record unsold inventory is not a crisis for buyers — it is an information advantage for those who know how to use it.
- The developer’s unsold unit count is the single most useful data point before entering any negotiation.
- Deferred-payment deals offer real flexibility but require full mortgage planning at the complete purchase price, not just the deposit.
- The bank guarantee (aravut chok mecher) is non-negotiable — verify it exists before paying anything beyond a small reservation fee.
- Qualified, pre-approved buyers are rare in this market; arriving as one gives you leverage that price comparisons alone cannot provide.
Questions to Ask Before You Negotiate and Key Terms to Know
Remaining-unit counts only become leverage once you understand the specific inventory. Before discussing price, ask the developer factual questions in this order:
- How many apartments are in the project, how many have signed contracts, and how many are still available?
- Which specific units remain unsold, and how long have they been marketed?
- Are the remaining units desirable (floor, exposure, parking, storage, layout), or only the leftovers?
- Do incentives apply to all buyers or only to selected units, and will every incentive be written into the contract?
- Is any unpaid balance linked to the Construction Input Index, and what is the expected delivery date?
A project with 180 apartments and only 40 signed buyers after a long marketing period tells a very different story than a 60-unit project with five units left. The pace at which units sell is the absorption rate, and slow absorption is what creates genuine negotiating room.
Key Israeli new-build terms
- Construction Input Index: an index that can raise the final amount payable when part of the price is linked to construction costs.
- Tofes 4: the occupancy approval that generally allows a completed building to be connected to utilities and lawfully occupied.
- Sale Law guarantee: a buyer-protection mechanism securing purchaser payments in qualifying new-apartment transactions.
How to ask – and how to read the answer
Ask the sales office directly: how many units in this project remain unsold, and how many have sold in the last three months? A high remaining count with slow recent sales is leverage; a near-sold-out project is not. Cross-check the answer against the Israel Tax Authority’s free real-estate transactions database, which lists recent comparable sales in the same project.
The pressure is real nationally: about 86,290 new apartments remained unsold at the end of January 2026 – roughly 31 months of supply – per the Central Bureau of Statistics (up from 83,400 at the end of 2025).
Related: what a 20/80 payment plan can hide, unpublished developer concessions, and flexible payment structures and the unsold-inventory backdrop.
