Shekel Strength Reverses Foreign Buyer Demand: French and British Investors Rise

American buyers have lost their dominance in Israel's foreign real estate market. American buyers comprised 49 percent of all foreign property purchases in the first quarter of 2026, compared to 60% a year earlier, according to government data released last May. Government economists attributed the slowdown directly to a 13.6% depreciation of the US dollar against the Israeli shekel, which effectively made Israeli real estate significantly more expensive for buyers relying on American currency. Meanwhile, French buyers purchased 130 apartments, up sharply from 84, and British buyers took 57 apartments, up from 37.

The shift reflects a fundamental reality that few foreign buyers grasp before committing funds to an Israeli property purchase: the shekel's appreciation has made Israeli property substantially more expensive for anyone converting from foreign currency. This is not a small adjustment. Buyers operating with dollar or pound budgets set just 18 months ago are now facing dramatically inflated costs—and many have simply walked away from the market.

How Currency, Not Price, Rewrote the Buyer Map

The common mistake new olim and foreign buyers make is treating property prices as fixed numbers. They see a Jerusalem apartment listed at 5 million shekels and calculate the dollar cost at one exchange rate. What they miss is that currency is one of the most important factors for foreign buyers, and even when a property price in shekels stays the same, the cost in dollars, pounds, euros, Canadian dollars, or Australian dollars can move significantly.

The shekel's strength against the dollar, currently at NIS 3.07, is affecting demand from overseas buyers. The dollar has weakened from roughly 3.8–4.0 shekels just a few years ago. The lowest US dollar to Israeli new sheqel rate was on June 1, 2026 when 1 US dollar was worth 2.8116 Israeli new sheqel. This means an American buyer who locked in a budget two years ago—say $500,000—now finds that the same shekel-denominated property costs $50,000 to $80,000 more due to currency movement alone.

A concrete example: a buyer who signed a contract in late 2023 on a 5,000,000 NIS apartment and expected to complete the remaining balance under similar exchange conditions is now facing roughly $280,000 more than originally projected on that balance alone, before taxes, legal fees, or any construction index adjustments are taken into account. This is not exaggeration. It is the lived experience of American buyers mid-transaction in 2026.

Where Americans Are Still Buying—and Why They're Avoiding Cheaper Markets

More than half, 52.5%, of American purchases in the first quarter were concentrated in Jerusalem itself, totaling 125 apartments. This persists even as the shekel strengthens. The reason is psychological and practical: Americans tend to buy in Jerusalem for religious affinity and community presence, not currency optimization. The median purchase price for American buyers in Jerusalem was NIS 5.1 million in Q1 2026.

The mistake here is assuming that high prices mean high-currency protection. They do not. The homes they acquired were significantly more expensive than those bought by other foreign nationals. Americans are priced out of volume purchases but still committed to premium properties. The highest concentrations of American expats and property owners in Israel are found in Jerusalem neighborhoods like Rechavia, Baka, and Talbiya, in Tel Aviv's Old North and Lev HaIr areas, and in coastal cities like Netanya (especially the Ir Yamim area) and Ra'anana, where English-speaking communities are well established.

Why the Euro and Pound Held Steadier—and French and British Buyers Won

The euro weakened by only 4% against the shekel over the same period that the dollar fell 13.6 percent. This smaller gap is the difference between staying in the market and leaving it. French buyers noticed. French buyers focused on more modest homes than their American counterparts, with an average purchase price of NIS 2.8 million ($962,000).

The real insight: European buyers have not necessarily grown wealthier or more interested in Israel. They simply face less currency headwind. A French buyer who budgeted at 2.5 million euros saw that purchasing power decline only 4 percent, not 13.6 percent. That difference is enough to sustain a buying decision. For Americans, the math simply stopped working.

Among French buyers, Netanya was the most popular destination with 35 apartments sold during the quarter, while Jerusalem and Tel Aviv tied for second place with 28 each. Bat Yam recorded 12 transactions, while Ashdod, historically a major hub for French real estate investment, saw just five purchases. The coastal markets work for French buyers because proximity to the sea and established French communities offset currency pain.

The Hidden Cost No One Budgets For

Here is the mistake most foreign buyers make: they calculate shekel-to-dollar cost for the purchase price, then assume they have understood the total expense. They have not. Purchase tax is paid in shekels, legal fees are paid in shekels, mortgage repayments are tied to shekels, construction-linked payments on new developments are in shekels, and maintenance, Arnona, and ownership costs are local currency expenses. Foreign buyers often underestimate how much currency movement changes the total cost of ownership. A property that looked affordable two years ago may now require substantially more foreign currency even if the asking price stayed similar.

Mortgage Math: Why Americans Face Higher Down Payments Now

The shekel strength creates an additional burden: mortgage qualification. Foreign buyers typically need 40-50% down payment (vs 25-30% for Israelis), an Israeli bank account, proof of income, and should expect higher interest rates. When a buyer's purchasing power shrinks 13.6 percent due to currency, the 40-50 percent down-payment requirement becomes substantially harder to meet within the same dollar budget.

An American planning to put down $400,000 on a $1 million property two years ago now finds that the shekel-denominated equivalent of that down payment has grown by $60,000–$80,000 due to the exchange rate alone. Banks still require 40-50 percent down, so the buyer either finds more dollars or withdraws from the market entirely. Many choose the latter.

European buyers face the same challenge, but the smaller currency shift (4 percent for the euro versus 13.6 percent for the dollar) leaves them closer to their original budget. It is enough to stay versus walk.

FAQ: Practical Steps for Foreign Buyers in a Strong-Shekel Market

Q: If I am a U.S. buyer with a firm budget in dollars, what is the single most important step I should take before any other action?

A: Speak with a foreign exchange specialist who may be able to offer forward contracts locking in today's rate for future payments. Any transaction must be structured to work at today's exchange rate, not at a more favourable figure that may never return. Do not assume the rate will move in your favor. Lock it in with a forward contract if you are serious about proceeding. This is not optional; it is the only way to avoid currency shock mid-transaction.

Q: Should I wait for shekel weakness before buying, or buy now at NIS 3.07?

A: This is a false choice. Another question constantly asked is whether it is worth waiting for Israeli property prices to drop before buying. Transaction volumes have fallen since the war began and, in some areas, prices have softened. As analysis found, foreign buyers are active but not driving the market, which means the fundamentals remain shaped by local conditions and long-term demand. It is a reasonable question to ask, but the structural case for Israel remains intact. If you have a genuine long-term commitment to owning in Israel (not trading), buy when you are ready and when the property meets your needs—not when the exchange rate looks favorable.

Q: I signed a contract 18 months ago and am now mid-transaction. Am I locked in to the old exchange rate or the new one?

A: This depends on your contract wording and how many payments remain. Your lawyer must review this immediately. If large shekel payments are still outstanding, you are exposed to currency risk unless you have already locked in a forward contract. This is why on a 5,000,000 NIS apartment with 4,000,000 NIS still outstanding, madad adjustments alone can add between $53,000 and $66,000 at today's exchange rate. When combined with currency movements, these increases can substantially alter the overall cost of a purchase. Get specialist help now, not later.

Q: Are French and British buyers genuinely outbuying Americans, or are they just buying cheaper properties?

A: Both. Buyers from the United States, France, and the United Kingdom accounted for 87% of all residential properties purchased by foreign citizens during the first three months of the year. French and British buyers are buying more apartments in total (130 French vs. 238 American), but Americans are spending more per property. The real story is that Americans have pulled back due to currency pain and are being selective—choosing only premium properties in established locations. French buyers are active across a wider range of price points and locations because their currency exposure is smaller.

What This Means for Your Aliyah Timeline

If you are contemplating aliyah and real estate purchase, the strength of the shekel at NIS 3.07 is a market headwind specific to your currency. However, for overseas buyers, the currency move has raised the dollar cost of Israeli property by more than the local price decline has reduced it. This means nominal shekel prices may have softened, but your dollar cost has risen. Do not assume a strong shekel is a buying opportunity; it is a buying obstacle if your home currency is depreciating against it.

The lesson from this year's market shift is clear: foreign buyers looking at Israel real estate in 2026 are focusing heavily on property prices, but the bigger financial issue right now may be the strength of the shekel. Understand your currency exposure before you sign anything. Lock in exchange rates with forward contracts for future payments. Budget conservatively in shekels, not at assumed favorable rates. And if you are American, accept that you are at a competitive disadvantage right now—European and other buyers with stronger currencies are winning market share precisely because their math works at NIS 3.07 and yours may not.

For a complete guide on aliyah-related questions, consult Nefesh B'Nefesh and the Jewish Agency, both of which offer financial planning resources for olim.