For years, foreign buyers helped fuel Israel’s booming real estate market, particularly in Jerusalem and Tel Aviv, often paying in US dollars while benefiting from a relatively weak shekel.

Now, with the Israeli currency having strengthened sharply against the dollar in recent months, the equation has flipped, real estate agents tell The Times of Israel.

Foreign conversion rates for the Israeli currency, which currently trades at around NIS 3 to the dollar, are forcing buyers to consider new financing options, look to buying “on paper” in new projects, or in some cases, downgrade their expectations and buy less expensive homes, agents say.

“The irony is that a lot of the reason market prices got so high is because of foreigners who came because of the weak shekel in past years,” said Yitzchak Kowalsky, CEO of YKK Jerusalem Real Estate. “Now, we’re seeing for the first time in years that Israeli clients can actually compete with foreign buyers.”

The Israeli currency is about 10 percent stronger than it was a year ago, and has fluctuated by more than 20% over the past 16 months, trading data shows.

A year ago this week, the shekel traded at NIS 3.37 to the dollar, compared to NIS 3.00 today. It reached as strong as NIS 2.80 against the dollar on May 29, after trading at NIS 3.74 14 months earlier on April 5, 2025.

The strength of the shekel means that while interest from foreign buyers is still high, their dollars, pounds and euros don’t go as far as they used to, with the cost of homes rising by hundreds of thousands in some cases when exchanging currencies.

Kowalsky recalled one client who had transferred dollars to Israel for his home purchase and recently forced to put up an extra NIS 200,000 ($66,572) to make up for the difference.

“It’s a good thing he had the money,” Kowalsky said. “What about all the people who can’t do that?”

The recent strength of the shekel has been rewriting the rules of Israel’s housing market, adding a new layer of uncertainty to a sector that has been looking to recover from more than two and a half years of security-related challenges, real estate agents say.

“The conversation has changed, but the demand hasn’t disappeared,” said Noah Sander, a real estate adviser and founder of Zionistinvestor.com. “I haven’t had a single client tell me they’re no longer buying because of the exchange rate. They’re just looking at different products.”

The shekel’s strength is the latest in a string of recent challenges to Israel’s real estate market. Once red-hot, the market has slowed in recent years as interest rates rose from near-zero levels, supply reached record........

© The Times of Israel