Monthly brief - October 2026

Hello everyone!

The holidays are behind us and we are in the final stretch of 2026, with Israel awaiting the results of the Knesset elections and a new government that will bring solutions for the real estate industry, which has been in a challenging period in recent months with a slowdown in sales. Overseas, we are seeing positive data on real estate in Europe in the first half of the year, alongside the interest rate hike by the US Fed Chair and the effect of the move on mortgages and the American real estate market.

This month we would like to draw your attention to:

A. Housing prices in Europe in the second quarter: the same pace of increase, a completely different price base - Portugal and Bulgaria lead the Union, Romania and Cyprus above the average.

B. Greece: the purchase tax jumps fivefold.

C. Greece: apartment prices keep rising but the pace has been cut almost in half.

D. USA: the mortgage rate is 7.28%, two weeks after the Fed raised rates for the first time since 2023.

Enjoy the read,

Adv. Ilan Leibovitch and the office team

Housing prices in Europe in the second quarter: the same pace of increase, a completely different price base - Portugal and Bulgaria lead the Union, Romania and Cyprus above the average

On October 1, Eurostat published the housing price index for the second quarter of 2026: in the European Union prices rose 4.7% compared with the corresponding quarter last year, and in the eurozone 4.0%. Compared with the first quarter the rise is 1.2% in the Union and 1.1% in the eurozone. Behind the average lies a gap of 12.5 percentage points between the countries we accompany.

Portugal recorded the highest annual rise in the Union, 16.5% (3.6% in the quarter), and Bulgaria, which joined the eurozone at the start of the year, is second with 15.5% (4.5% in the quarter). The direction is opposite between the two: in Portugal the pace is slowing, from 17.8% in the first quarter, and in Bulgaria it is accelerating, from 14.8%. Romania, which is not a eurozone member, recorded 12.1% (4.4% in the quarter), and Cyprus 7.9% (2.4% in the quarter), 3.2 percentage points above the Union average. Italy, at 4.0% (1.7% in the quarter), is at the eurozone pace.

To understand what these numbers mean, one must also look at the price level: in Lisbon a new apartment costs 6,226 euros per sq.m. and second-hand 4,896 (actual transactions, INE data), in Bucharest 2,637 and 2,247, and in Sofia and Nicosia the 2,000-2,700 euros per sq.m. range. A rise of 15%-16% a year therefore lands on a completely different base in Portugal and in Bulgaria, even if the pace is similar. Note: these are city prices, and the rise in the index is a national figure.

In Portugal there are signs that prices are running ahead of the market. The number of transactions in the second quarter fell 6.4% in a year (INE), while the balance of housing credit reached 119.06 billion euros in August, a rise of 11.2% in a year (Bank of Portugal). In August the maximum debt-to-income ratio was tightened from 50% to 45%.

It is important to note: Greece is not included in the Eurostat table. According to the Bank of Greece (September 15), apartment prices in the second quarter rose 5.5% in a year (6.2% in new apartments, 5.0% in older ones), but this is an index of apartments only and not at a level of full comparison. Likewise, the Eurostat index is aggregate and does not break down between new apartments and second-hand, and therefore does not show the gap we presented in Lisbon.

What stands out is not the single number but the gap between three types of markets: markets that rise fast and are slowing (Portugal), markets that rise and are accelerating (Bulgaria), and markets at a quiet pace (Italy, Greece). A client who asks “how much has the market risen” gets a partial answer. The more practical question is at what price level he is entering, what financing is available to him, and what the contract says about the handover date. In Romania, the reduced VAT window (9%) on residential apartments ended on September 30, and the data of the coming quarters will show whether this has an effect on prices.

* Greece: Bank of Greece figure, apartments only.

Greece

Purchase tax for foreigners on the way to a fivefold jump - what this means in practice for Israeli investors

In the traditional speech opening the Thessaloniki Fair on September 5, Greek Prime Minister Kyriakos Mitsotakis announced an intention to raise the real estate purchase tax for buyers who are not citizens of the European Union - from 3% to 15%, five times today's rate. He explicitly named buyers from China, Turkey and Israel as a factor that, he claimed, makes it hard for Greeks to buy an apartment at an affordable price.

The difference is dramatic at every price range: on a 100,000 euro apartment the tax rises from 3,000 to 15,000 euros; on a 300,000 euro apartment - from 9,000 to 45,000 euros; and on a 500,000 euro apartment - from 15,000 to 75,000 euros. Anyone investing through the Golden Visa program in high-demand areas (a minimum amount of 800,000 euros) is expected to see the tax jump from about 24,000 to 120,000 euros.

In Greece they are already calling it “the Canadian model” - in Ontario in 2017 a similar 15% tax on foreign buyers was imposed to cool the housing market, and it was gradually raised to 25% today. That is, 15% will not necessarily be the ceiling.

What is not yet known: there is no final legislative text, and at least three substantive questions are open - whether the tax will apply to all types of property or only to residential apartments; what happens to someone who holds, alongside an Israeli passport, citizenship of a European Union country as well; and whether a purchase through a company is counted differently from a personal purchase.

There is also uncertainty about the determining date: someone who completes the transaction before the tax takes effect will still pay at the current rate, but the question of what exactly “determines” the date, signing of the notarial contract or the date the tax is actually paid, is still open, and weeks can pass between the two. Anyone currently in the process of buying in Greece should verify with the accompanying lawyer exactly how the transaction is timed against that date.

As of this writing, according to reports published in Greece, the purchase tax increase is expected to take effect in July 2027 (the first reports spoke of entry into force in January 2027).

We will continue to update when the final legislation is published.

Apartment prices in Greece: the rise continues, but the pace has been cut almost in half

The Spitogatos index, based on asking prices from millions of listings on Greece's largest real estate site, shows a clear picture for the second quarter of 2026: prices are still rising across Greece, but at a much slower pace than a year ago. The average asking price for an apartment rose 6.1% relative to the corresponding quarter, compared with a jump of exactly 9.7% a year ago. That is, the pace of increase was cut almost in half within a single year. Athens (Attica) rose 5.3% (compared with 9.4% a year ago), and Thessaloniki 7.7% (compared with 11.4%). In the rental market the slowdown is far more dramatic: a rise of only 1.3% nationwide, compared with 7.2% a year ago - almost a complete halt.

The gap between the most expensive and the cheapest areas in Greece remains huge, and even shows how fragmented the market is: the southern suburbs of Athens (4,231 euros per sq.m.) and the Cyclades (4,063 euros per sq.m.) at the top, versus Kastoria in northern Greece, only 585 euros per sq.m., less than an eighth of the price in the southern suburbs. Within Attica itself the gap is even sharper: Vouliagmeni leads with 7,364 euros per sq.m., almost five times the cheapest area, Varnavas, where a sq.m. stands at 1,407 euros.

And here is the figure that is truly surprising: the areas that jumped the most this year are not the familiar luxury ones, but rather ones that were until recently considered “budget.” Drosia, in the Athens suburbs, jumped 30.2% in a year, the sharpest jump in all of Attica. Spitogatos attributes this, among other things, to a rise in the supply of garden apartments and new single-family homes with a high energy rating, which come at a higher price. Daphne (27%), Lykovrissi (25.6%) and Tavros (22.5%) are also on the same trend. In other words, the price rise is spreading to areas that until recently were the cheap alternative.

Greece's banking system is opening the mortgage tap. The average loan-to-value ratio (LTV) has risen, and banks are now willing to finance up to 90% of a property's value, a figure that partly explains why even in the “cheap” areas there is still demand pushing prices up.

It is important to remember that the Spitogatos index is based on asking prices, not actual transactions; the final price is usually lower. For comparison: the Bank of Greece, which measures by actual valuations, reported a rise of 5.7% in the first quarter of 2026 (the latest figure it published), slightly more conservative than Spitogatos, but in exactly the same direction.

Our media coverage

15 million shekels on a campaign. Three times the norm in the industry. More than a hundred thousand people went in, checked, some submitted offers. And in the end - 53 signatures. Out of 373 apartments. Maybe it wasn't an apartment tender at all, but a sophisticated data-collection operation.

Someone sold you an apartment in Athens based on an Airbnb yield of 7%-8%. Now ask yourself - who told you the local authority will let you keep renting it out that way? If you bought a property abroad based on an Airbnb yield - check now, not when you discover that the cash flow you planned is no longer legal.

20 Israelis are on the list of arrest warrants in Thailand today. Not because of drug smuggling. Because they bought land through the mechanism that every agent in Koh Phangan will sell you as a “well-known solution” - a Thai signs as the shareholder, you control in practice.

A reasonable marketing budget in the industry is 2%-3% of sales. Prashkovsky reached 9.3%. Three times. 15 million shekels on a campaign, against 160 million shekels in value of sales in contracts actually signed.

Romania

Construction at the second-highest level ever, but the annual growth rate has weakened

The Romanian statistics institute (INS) published construction activity data for July. According to the data, the volume of construction work in the first seven months of the year rose 11.2% compared with the same period last year, in the gross series. After adjustment for seasonality and working days, the rise stands at 8.2%. The greatest growth was recorded in the “new construction works” category.

In July itself, activity, after seasonal adjustment, reached a level about 60% higher than the 2021 average. This is the second-highest level measured in the sector. Compared with June, activity rose 7.6% in the gross series and 1.4% after adjustment.

In this market, annual growth of 2.0% in July counts as a sharp slowdown. In the second quarter the pace stood at 18.0%, and in the first quarter at 7.7%. The slowdown stems mainly from a high comparison base: July 2025 was then the month with the highest adjusted level ever recorded, among other things because of work brought forward ahead of the VAT increase in August 2025. After seasonal adjustment, July 2026 activity is 8.3% lower than in July last year. Residential construction remained the strongest component in July, but the INS did not provide separate figures for residential and non-residential.

The meaning is that the sector is at a high level of activity and not on a cooling trend, and the annual slowdown mainly reflects the comparison with an exceptional period. At the same time, the National Bank of Romania left the interest rate at 6.5% in August and warned of inflation risks, and this combination requires investors to examine carefully the financing costs for new projects.

Bulgaria

Foreign direct investment jumped to 2.18 billion euros in the first half of 2026

The Bulgarian National Bank published balance of payments data for the first half of the year. According to the data, foreign direct investment in the country totaled 2.18 billion euros, which is 1.7% of GDP.

The jump looks especially dramatic against the corresponding period last year, but a considerable part of it stems from a low base figure. The bank revised the first-half 2025 figure downward, from the 848 million euros originally published to only 292.7 million euros. The comparison with the original figure depicts a much more moderate rise than the comparison with the revised figure, so the jump should be read with caution.

In the real estate sector there was a net capital outflow by foreign companies of 5.6 million euros, compared with 12.6 million euros in the same period last year. This is a small outflow in absolute terms, and it does not indicate a trend. It should also be noted that in the first five months of the year investment reached 2.28 billion euros, meaning the cumulative figure fell in June.

For real estate investors, the data point to a significant flow of foreign capital into Bulgaria after its accession to the eurozone. However, it is concentrated mainly outside real estate itself, and therefore should not be seen as an indication of growing foreign demand for properties.

USA

The US mortgage rate at 7.28%, the highest since 2023, two weeks after the Fed raised rates for the first time since 2023: demand weakens, construction contracts and prices moderate

On September 16 the Federal Reserve raised the interest rate by 25 basis points, to 3.75%-4.00%, in a unanimous vote (12-0). This is the first hike since July 2023. Fed Chair Kevin Warsh said inflation is “too high and has lasted too long,” and the Fed signaled that another hike is possible by the end of the year. In the mortgage market the rise has continued without pause since then: according to Freddie Mac, the rate on a 30-year fixed mortgage stood on September 17 at 6.95% (from 6.76% a week earlier), on September 24 at 7.03%, and on October 1 at 7.28%. According to Fox Business, this is the highest level since November 22, 2023. A year ago the rate stood at 6.34%. By our calculation, on a 500,000 dollar 30-year loan, the difference in the monthly payment (principal and interest) between 6.34% and 7.28% is about 313 dollars a month (3,421 versus 3,108 dollars).

Demand is already responding. The NAHB builder confidence index fell in September to 32 points (from 35 in August), the lowest level since September 2025, and 38% of builders cut prices (by 6% on average). The association's chair said buyer traffic weakened across most of the country because of interest rates. Pending home sales in August rose 0.3% in the month but fell 4.7% in the year, and are about 30% below pre-COVID levels, according to NAR's chief economist. In the week ending September 25, mortgage applications fell 6%, and purchase applications 4%, according to the MBA. Adjustable-rate mortgage applications already make up 10.3% of applications, the highest share since October 2025. Inventory rose in August to 1.62 million homes, for the first time above 1.6 million since November 2019, and months' supply stood at 4.9 (from 4.6 in July).

On prices, the picture is moderate but not one of collapse. The Case-Shiller index (September 29) showed an annual rise of 1.9% in July (from 1.6% in June), and of 2.5% in the 20 large cities. Chicago (6.9%) and New York (5.8%) lead; Seattle (-1.6%), Las Vegas (-1.3%) and Denver (-1.1%) are falling. Since inflation in July stood at 3.4%, home values have fallen in real terms for 14 months in a row. The median price of an existing home in August was 429,100 dollars, a rise of 1.6% in a year. On the supply side, housing completions in August fell 11.9% in the month and 27.1% in the year (1.128 million at annual rates), while single-family housing starts rose 7.6% in the month.

As for what is expected: the August PCE index, published on September 30, stood at 3.4% (core: 3.0%), below forecasts (3.7% and 3.3%), partly because of methodology changes by the Bureau of Economic Analysis. Following this, the chance of a hike in October fell to about 35% according to CME contracts, and Fed Vice Chair John Williams said there is no “urgency” and signaled that the next step will come toward the end of the year. The Mortgage Bankers Association (MBA) forecasts two more hikes in the coming year, and mortgage rates remaining around today's levels.

What stands out is that interest rates weaken both demand and future supply at the same time. The result is a slow market with a moderate rise in prices and not a sharp fall, but the gaps between cities are large. For clients financing purchases in the USA with leverage, the cost of debt has risen by almost one percentage point in a year, and the central question in a transaction is whether the rental yield covers it.

Accurate as of the issue date. Laws, tax rates and procedures change; check the current position before any decision.

Translated from the Hebrew original. עברית

All issues