Thursday was about money and machines, not price charts. The single change that touches the most people is quiet but real: from July 1 a new Bank of Israel rule reshapes how banks judge whether you can carry a mortgage, and it changes what you can borrow against a home you already own. At the same time the strain in building showed its teeth. A construction company that has stood for 40 years asked a court to wind it up under about 107 million shekels of debt, and the builders’ association used its annual conference to demand 50,000 foreign workers, warning that without them homes take far longer and cost buyers more. A leading developer told a Tel Aviv conference that real prices have already dropped about 20 percent over four years, hidden by the discounts and financing deals we have written about before. Fresh data suggests the slowdown is spreading upstream: in the big demand cities, developers are barely even asking for permits to build. And a tax ruling handed sellers a sharp warning about lowballing a declared value.
The backdrop (already covered, so just the markers): the last official reading still shows apartment prices down about 1.3 percent on the year, part of the long split we track in why the market is splitting, not crashing, while rents keep climbing. Registration for the 11th discounted housing lottery closed on July 1 with about 115,000 households chasing 7,922 homes, and no draw has been run yet. The next interest rate decision is Monday July 6 at 16:00, and the next price index lands July 15.
The mortgage math changed on July 1
The biggest practical news is a rule, not a headline number. From July 1, 2026 a Bank of Israel directive changes two things at once for anyone borrowing against a home.
First, if you ask for a new loan against a property you already own (a general purpose loan, a renovation loan, a top up), the bank can no longer look at that loan on its own. It must add the new payment to your existing mortgage payment and to your other monthly debts (car loans, leasing, credit cards, loans from non-bank lenders, alimony, fixed essentials), then test the whole stack against your income. That test is the payment to income ratio, or PTI. The regulator’s ceiling is 50 percent, and in practice most banks stop nearer 40 percent.
Second, as a trade-off, banks may now lend against a home for non-purchase purposes up to 70 percent of its value, up from 50 percent, but the amount above the old 50 percent line is capped at an extra 200,000 shekels.
Our math (check it): that 200,000 shekel cap quietly limits who the higher 70 percent actually helps. The jump from 50 to 70 percent is 20 percent of the home’s value, and 20 percent only stays under 200,000 shekels while the home is worth up to about 1,000,000 shekels (200,000 divided by 0.20). Above that, the cap bites and your real limit slips back down:
| Home value | Old cap (50%) | New headline (70%) | Real cap after the 200k limit | Effective share |
|---|---|---|---|---|
| 1,000,000 | 500,000 | 700,000 | 700,000 | 70% |
| 2,000,000 | 1,000,000 | 1,400,000 | 1,200,000 | about 60% |
| 3,000,000 | 1,500,000 | 2,100,000 | 1,700,000 | about 57% |
Why it matters: if you were counting on pulling cash out of your home, or on stacking a fresh loan on top of your mortgage, the door is narrower from today. The bank now judges your total debt, not each loan alone, and the shiny 70 percent figure mostly helps lower value homes. Before you sign anything from July 1 on, add up every monthly payment you already owe, because that is now what the bank does. For the wider picture of how lending, not prices, is steering this market, see how financing is holding the market up.
A builder that lasted 40 years just asked a court to close it
A veteran contractor, M.G.A.D Building and Investments, which has worked since 1980, filed an urgent request in the Central District Court for insolvency proceedings and a temporary trustee. The company says the war years broke its momentum: work stopped, a sudden shortage of workers hit its sites, and a frozen economy dried up the income it needed to keep going.
The numbers show who gets hurt when a mid-size builder falls. Total debt is about 107 million shekels, across roughly 52 employees and 12 active projects in Tel Aviv, Ramat Gan, Hod HaSharon and Ramat HaSharon.
Our breakdown (check it): of that 107 million shekels, about 65.5 million is owed to suppliers and subcontractors, about 34.7 million to banks and lenders, and about 7.2 million to workers and the tax authorities. So the small trades down the chain carry roughly 61 percent of the loss (65.5 divided by 107), the banks about 32 percent, and workers and the state about 7 percent. A bank can absorb a bad loan. A tiling crew or a window supplier that is owed money on one of these 12 sites often cannot.
Why it matters: if you are buying a new build, the builder’s health is now part of the product. Ask who is financing the project, whether your payments sit in a protected escrow (a bank guarantee under the Sale Law), and what happens to your contract if the developer stops paying. This is the human edge of the freeze we described in bulldozers rolling while sales sit frozen.
Builders want 50,000 foreign workers, and put a price on the wait
At the builders’ association annual conference in Eilat, its president, Roni Brick, called on the government to approve direct import of 50,000 foreign workers, saying the construction and infrastructure sector is short about that many pairs of hands. The claim came with two concrete promises: bring the workers, the association says, and the average project finishes about 14 months sooner, saving a buyer roughly 70,000 shekels.
Read that 70,000 shekel figure carefully, because it is easy to misread. It is not a cut to the price of the apartment. It is the rent a buyer saves by getting the keys 14 months earlier instead of paying to live somewhere else while they wait.
Our math (check it): 70,000 shekels spread over 14 months is almost exactly 5,000 shekels a month (70,000 divided by 14). That is close to a real mid-range rent in central Israel, which is a useful gut check: the association’s own number quietly assumes a buyer is paying around 5,000 a month in rent during the wait. The saving is real, but it is a saving on time, not on the sticker price.
Why it matters: this is a lobbying ask, not a done deal, so treat the promise as the industry’s own claim. But the direction is honest. The labor shortage is one of the clearest reasons building runs slow and dear right now, and it links straight to the insolvency above and to the permit slump below.
A top developer says prices already fell 20 percent
At a real estate conference held by the accounting and advisory firm EY in Tel Aviv, the chief executive of Tidhar, one of Israel’s larger developers, said that in real terms apartment prices have dropped about 20 percent over the last four years. His point was about measurement: he argues the official index misses much of the fall because developers now sell with heavy financing deals, interest-free periods and other benefits, so the headline price looks steady while the true cost to the buyer quietly drops.
This is one executive’s estimate, not an official statistic, and he said as much. We are not restating it as fact. What is worth keeping is the mechanism, because it is the same one we explained in why developers are offering incentives now: when a builder throws in the financing instead of cutting the listed price, the discount hides inside the deal terms rather than showing up in the national number.
Why it matters: if you are comparing a new build to a resale, do not trust the listed price alone. Price the whole deal, financing terms included, because the real gap between two apartments can be far wider than their stickers suggest.
In the big cities, builders are barely asking to build
A leading indicator is flashing. New analysis by the property data firm Madlan, drawing on Central Bureau of Statistics permit data, finds that requests for building permits in the main demand cities fell sharply in 2025 against 2024. Because a permit request comes before anything is built, it reflects what developers are deciding to do now, and it points at supply two to three years out.
- Haifa: requests down about 88 percent, to only 258 housing units.
- Lod: down about 79 percent, to 902 units.
- Ramat Gan and Rishon LeZion: down about 68 percent each.
- Nationally, issued permits were down about 15 percent.
These city figures come from a single analysis, so treat them as Madlan’s read of the data rather than a settled official count. Even so, the shape is clear and it fits everything else on this page.
Why it matters: today’s frozen sales are visible. This is the part you cannot see yet. If developers stop asking to build now, the pipeline thins in a few years, which can put a floor under prices in the very cities that look softest today. It is the quiet other half of the freeze we track in Israel’s deepening housing freeze.
A tax ruling that should worry anyone tempted to lowball
A Tel Aviv District Court appeals committee sided with the Tax Authority in a dispute over the value of rooftop and unused building rights sold in Tel Aviv. The seller declared the rights at 1.82 million shekels. The Tax Authority valued them at 3.71 million. The committee landed at 3.38 million, rejected the seller’s argument that the value should be based on construction services he would receive, and ordered him to pay 20,000 shekels in costs.
The reasoning is the takeaway: when a seller declares a value well below the market for the land or rights being sold, the burden of proof falls on the seller to justify it with real evidence and expert reports. Without that, the tax office’s market-based figure wins.
Why it matters: the seller’s real estate appreciation tax (mas shevach) is calculated off the value that stands. Declaring a low number to shrink the bill is not a quiet choice. If you cannot prove it, you can end up taxed on almost double your figure, plus costs. Anyone selling rights, a roof, or an apartment with extra building potential should get a proper appraisal before they file.
Also moving today
Two smaller items advanced that are worth a line each:
- Kfar Shalem compensation clears a first vote. The Knesset Interior and Environment Committee approved for first reading a bill to set a compensation mechanism for residents facing eviction in the south Tel Aviv neighborhood of Kfar Shalem, a fight that has dragged for decades. Eligibility would key off who lived there before a set date, April 1, 1987, and offer either land to build a home or cash to buy elsewhere. The finance ministry and the Land Authority had pushed back on the cost.
- A reshuffle at the housing ministry. Yuri Gamerman, who led new construction, is moving up to run the government Urban Renewal Authority, and Aharon Israel, the ministry’s central district manager, takes over the new construction arm that handles marketing, roof agreements and new neighborhoods. It is inside baseball, but these are the people who decide how fast the state’s own supply moves.
Dates to watch
- Monday July 6, 16:00: Bank of Israel interest rate decision, with a fresh quarterly forecast. The rate has sat at 3.75 percent since late May. Full schedule in our 2026 rates and inflation calendar.
- Soon: the 11th discounted housing lottery draw. Registration closed July 1 with about 115,000 households competing for 7,922 homes across 19 towns. The ministry is still checking eligibility and reservist status, so winners are not out yet.
- Wednesday July 15, 18:30: the next official home price index, covering April to May.
