Central Tel Aviv home construction costs up 15.4%

The Real Estate Appraisers Association in Israel today published the latest estimate for the costs of building new homes in June 2026, which shows a broad rise in prices throughout the country.

Construction costs increased in the past year (compared with June 2025) by an average of about 3.2%. The estimate, which is intended to reflect actual construction costs, includes 16 geographic regions and four construction categories. Of the 64 comparison items, 54 recorded an increase in price, and only three recorded a decrease.

Tel Aviv leads the increase in construction costs

The upward trend is clearly led by central Tel Aviv, which recorded the highest regional increase in price in the estimate – a weighted average increase of about 6.9%. The association notes that the data refers to the construction of average apartments of 85-100 square meters in size. Naturally, in smaller apartments the price per square meter is higher.

The most unusual and sharp increase in the entire report was recorded in the low-rise building category in central Tel Aviv. The cost of construction in this area jumped by about 15.4% in one year, climbing from NIS 10,400 per square meter in June 2025 to NIS 12,000 per square meter in June 2026.

Central Tel Aviv also holds the title of the highest construction cost listed in the updated estimate: the cost of constructing a multi-story building in this area has increased by about 5.8%, rising from NIS 12,000 per square meter to NIS 12,700 per square meter. This is a cost that is more than twice as high as the cost in areas where construction prices are low. In the high-rise building category in the city center, an increase of about 3.7% was recorded, from NIS 10,700 to NIS 11,100 per square meter.

Cost increases in Tel Aviv are clearly felt in other parts of the city

In south and east Tel Aviv, the cost of constructing a low-rise building rose from NIS 7,500 to NIS 8,000 per square meter (an increase of about 6.7%), and the cost of a high-rise building climbed from NIS 7,300 to NIS 7,700 per square meter (an increase of about 5.5%).

In neighborhoods north of the Yarkon River (including the Sde Dov district, where thousands of apartments are currently being built), the cost of a high-rise building rose from NIS 8,700 to NIS 9,100 per square meter, while a multi-story building saw a more moderate increase, from NIS 10,500 to NIS 10,600 per square meter.

Real Estate Appraisers Association chair Nehama Bogin stressed the importance of updating the estimate to examine the economics of projects in real time: “An increase of several hundred shekels per square meter, and in some cases even more than NIS 1,000 per square meter, translates into tens of millions of shekels in a project of significant scale and may directly affect the ability to implement it. Planning committees are required to make adjustments on the fly. Only an ongoing and flexible update of the calculations will allow projects to be examined realistically and prevent a situation in which plans are approved on paper but are not economical to implement.”

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On the sharp rise in Tel Aviv, Bogin said: “In Tel Aviv, the importance of the estimate is re-emphasized, given the surge in construction costs, which results, among other things, from long execution periods, relatively limited working hours, logistical limitations and unique urban requirements.”

The costs do not include groundwater depletion – an expensive component that is very relevant in Tel Aviv.

The situation in the rest of the country

The increase in Tel Aviv is particularly noticeable compared with nearby areas. Herzliya and Ramat Hasharon recorded a weighted average increase of about 4.8% (with a 6.8% increase in high-rise buildings). On the other hand, Jerusalem recorded relative stability with a weighted increase of only 0.8%, and Ramat Gan and Givatayim recorded an average increase of only 0.4%, where there was even a decrease in the cost of a high-rise building from NIS 7,700 to NIS 7,500 per square meter.

However, the increase in costs is not limited to areas of high demand, and increases were also recorded in Haifa, Eilat, Beersheva and most regions of the country.

The causes of the increase

The Real Estate Appraisers Association notes with regard to the data that there is a possible deviation of 10%, and that the estimate does not include additional costs such as connection to infrastructure, VAT, as well as indirect costs such as planning, management and supervision, construction fees and levies, overhead and financing costs.

The Association also notes the reasons for the increase. The period between mid-2025 and mid-2026 was characterized by the continued effects of the war on the construction industry. The industry has faced a shortage of professional manpower, a widespread shift to employing foreign workers at higher costs, lengthening schedules, and rising financing costs (interest rates have begun to decline, but very slowly) and execution. Added to this were an increase in the construction input index (mainly in the labor component and imported products), an increase in the number of contractors that have encountered difficulties and ceased operations, and a widening gap between construction starts and the rate of project completion.

Published by Globes, Israel business news – en.globes.co.il – on July 6, 2026.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.