The 80% Bill Comes Due for Israel’s Paper Buyers

It is Shabbat, so Israeli newsrooms were quiet on July 25. The real news day was Friday, July 24. Here is what matters.

The biggest theme is a cash squeeze on people who bought new homes “on paper.” Many signed a 20/80 deal, which means they paid 20% at signing and owe 80% at handover. That 80% is now coming due, and mortgage rates have roughly doubled since they signed. A Tel Aviv developer tried a different way to sell slow stock: it raffled off an apartment as a prize. A new court ruling gave builders and buyers a fresh way to claw back tax when a contractor collapses. Netanya cleared a permit for 129 new homes, and a Haifa hilltop project opened its show apartment. Down on the ground, a 4-room flat in Afula sold for less than a 2-room in Holon. Below are the details, each traced to its source, with a few figures we worked out ourselves.

The 80% payment is coming due, and the rate is not the one they planned for

Thousands of Israelis bought new apartments “on paper,” before the building was finished. Most used a 20/80 plan. That means they paid about 20% up front and owe the other 80% at handover. Now the buildings are finishing, so the big 80% payment is due.

Here is the trap. When they signed, around 2021 to 2022, the prime interest rate was near 1.6%, and many buyers penciled in a mortgage cost of roughly 2.5%. Today the Bank of Israel base rate is 3.5%, which puts the prime rate at 5%. So the loan they need now is far more expensive than the one they planned.

Bizportal, July 24 gives a clear example. A family taking a 2.4 million shekel mortgage would see the monthly payment jump from about 10,800 shekels to about 14,000 shekels. That is roughly 3,000 shekels more every month. The report says about 56,000 apartments sold in 2021 and about 40,500 in 2022 used these plans, and it counts about 1,300 buyer cancellations on deals signed between 2021 and 2023.

Our figure: using Bizportal’s own example, the higher rate lifts the monthly payment by about 30% (14,000 divided by 10,800). That is close to 38,000 shekels more per year (3,200 times 12). We are showing the math so you can check it; the early years of a loan are mostly interest, so the yearly gap stays wide for a long time.

Building costs add to the pain. The construction materials price index rose 3.7% in the year to June 2026. On a home where part of the price is linked to that index, the final bill can climb by tens of thousands of shekels after signing.

Why it matters: if you bought on paper, price the 80% at today’s 5%, not the rate you assumed. If you are buying now, ask the developer in writing about payment timing, rate assumptions, and what happens if you cannot close. For the wider glut of unsold new homes behind this squeeze, see our note on new supply and the fire sale of flats.

A Tel Aviv builder raffled off an apartment to move slow stock

Selling new apartments is slow, so one developer got creative. Anshei Ha’ir ran a promotion in its Tel Aviv projects in quarters 3 and 4. It gave away a 2-room apartment near Kikar HaMedina, worth about 2.5 million shekels, as a prize. One of every 50 early buyers was entered to win.

According to Globes, July 24, the promotion moved 13 apartments worth about 112 million shekels in total, at an average of about 75,000 shekels per square meter. There is a catch for the winner. Globes says the winner still owes a stack of costs: a tax on lottery prizes, purchase tax, VAT (value added tax, a sales tax on the deal), plus legal, registration, management, and infrastructure fees. Globes puts that load at about 66% of the apartment’s value, or roughly 1.65 million shekels.

Our figures: after those costs, the “free” apartment is really worth about 850,000 shekels to the winner (2.5 million minus 1.65 million). That is about 34% of the sticker price, so this is closer to a one-third-off flat than a free one. And the 13 sales averaged about 8.6 million shekels each (112 million divided by 13), which shows these are pricey homes, not starter flats.

This is the same company that, back in January, walked away from a Quarter 4 project as building costs soared. A prize giveaway is another sign that demand for high-end Tel Aviv new-builds is soft.

Why it matters: a prize or a gift can hide the real cost. Always add the taxes and fees to the headline price before you judge any deal.

When a builder collapses, buyers just won a way to claw back tax

Contractor collapses have been in the news for weeks. A new ruling changes the money math when one happens.

Here is the background in plain words. On many projects the builder posts a bank guarantee, which is a promise of money the buyer can seize if the builder fails to deliver. When the builder collapses and that guarantee is “forfeited,” the buyer collects it.

The Tel Aviv District Court has now ruled that this forfeiture lowers the real price of the deal. Because VAT was charged on the higher original price, that means too much VAT was paid, so a refund is due. The court rejected the Tax Authority’s view that the seized guarantee was just extra compensation. In the test case, the companies Ortam Sahar and Melibu cut their VAT by about 12 million shekels, and the court ordered the Tax Authority to pay 75,000 shekels in costs. This was reported by Globes, July 24 and by Magdilim, July 23.

Why it matters: if your project’s builder failed and a guarantee was forfeited, a tax refund may now be on the table. Ask a tax lawyer whether this ruling touches your deal. For the earlier decisions on delays and VAT, see our page on how Israeli courts are redrawing the rules on delivery delays and VAT.

Netanya cleared 129 new homes in Kiryat HaSharon

Netanya’s local planning committee granted the developer Mishab a building permit for two 16-storey towers, holding 129 apartments, in the Kiryat HaSharon neighborhood. The project is called Mishkenot HaPark. This was reported by Merkaz HaNadlan, July 24.

Kiryat HaSharon is a growing area on the eastern edge of Netanya, popular with families for its parks and newer buildings. Buyers should know the wider project has a history worth checking: some earlier Mishkenot HaPark buyers complained to the builder about a long handover delay, so ask about the exact delivery date and the penalties for lateness before you sign.

Why it matters: a fresh permit means more supply in Netanya, which can ease prices there over time. If you are buying in a new phase, get the promised handover date and the late-delivery terms in writing.

A Haifa hilltop project opened its show apartment

On the top of the Carmel in Haifa, the developer Donitz-Elad, together with businessman Gad Zeevi, opened the model apartment for a large luxury project called Yefe Nof 120, also known as Zeevi Park. This was noted in Merkaz HaNadlan’s news briefs, July 24 and covered earlier by Mynet Haifa.

The plan is for about 216 homes plus shops on a site of roughly 13,000 square meters, with wide views from the ridge. The build is phased: the first stage brings about 79 apartments in two buildings, and a later stage adds about 137 more in two more buildings.

Why it matters: Haifa stays one of the cheaper big cities in Israel, but this is a top-end project on a prime ridge. A show apartment lets you judge finish and layout in person before you commit to an early-stage buy.

What homes actually sold for this week

Numbers on the ground tell the story better than any forecast. TheMarker, July 24 listed real recent deals:

• A 4-room apartment in Afula sold for 1.2 million shekels, which is less than a 2-room flat in Holon.
• A 4-room apartment in Jerusalem, with a 139 square meter garden and two parking spots, sold for 3.3 million shekels.
• A 4-room apartment in Kiryat Gat, with a 30 square meter balcony, also changed hands.

Our figure: the Jerusalem 4-room cost about 2.75 times the Afula 4-room (3.3 million divided by 1.2 million), for the same room count. Location, not size, drove almost all of that gap.

Why it matters: the same “4 rooms” can mean wildly different prices by city. If you are flexible on location, a smaller city like Afula can buy far more space for the money.

Already covered: one line each to update

These moved again on Friday, but we already own the beat, so no new page. We will update the existing posts:

• Foreign buyers still piling in. Foreign-resident mortgage borrowing jumped about 20% in a single month, with record borrowing on homes worth over 5 million shekels, per Globes English; Maariv puts the rise at about 50% over two and a half years. Update: record share of Israeli mortgages went upmarket.
• Power grid squeezes the data-center land rush. The Electricity Authority suspended new power-connection approvals, which clouds the future of server-farm sites, per Globes English. Update: Israel freezes the data center land rush for 140 days.

What we checked and set aside

Being exhaustive also means saying what we dropped and why, so nothing looks missed.

• Already published by us: the Jerusalem church-land families losing half their value, the Sde Dov polluted plots, the Tel Aviv basements ruling, Bank Jerusalem’s 750 million shekel Ramat Aviv deal, the Rotstein Ramat Gan renewal, the Karmei Gat 11,000-home plan, the MGAD builder collapse, and the Neve Tzedek and Ramat HaSharon deals. All ran in the last few days.
• Old news resurfacing: the Shapir contract cancellations in Beit Shemesh trace to a July 19 report, outside our 24-hour window.
• Not really today’s event: a German couple’s Haifa purchase and several lifestyle features are magazine pieces, not dated news.
• Not Israel: a New York luxury-home tax and a Manhattan tower scare are US stories.
• No fresh official data: there was no new Bank of Israel or Central Bureau of Statistics release on Friday or Saturday. The latest housing index (April: about 1.0% down for the month, about 2.0% down for the year) came out in mid-July and is not new.

Dates to watch

Several state land tenders close on Sunday, July 27, per the Israel Land Authority list: Ashdod (Rova 6) with about 520 homes, Kfar Qara with 117, Ma’alot-Tarshiha with 96 at a target price, and a small lottery tender in Dimona. A very large tender in Be’er Yaakov, about 2,409 homes, closes on November 16. The next real-estate brokers’ licensing exam is set for November 15, 2026.

Sources

All links point to the original reports, with tracking removed.

• Bizportal, July 24: on-paper buyers face the 80% payment at higher rates.
• Globes, July 24: Anshei Ha’ir apartment raffle.
• Globes, July 24: VAT refund after guarantee forfeiture; and Magdilim, July 23.
• Merkaz HaNadlan, July 24: Netanya Mishab 129-home permit; Mynet Netanya on the project history.
• Merkaz HaNadlan, July 24 and Mynet Haifa: Donitz-Elad and Gad Zeevi Carmel launch.
• TheMarker, July 24: recent sale prices in Afula, Holon, Jerusalem, and Kiryat Gat.
• Globes English and Maariv: foreign-resident buying and mortgages.
• Globes English: power grid and server-farm sites.