The drop in the dollar of nearly 10 percent in recent weeks and months has shaken the real estate market - particularly sales, but also rentals. A survey conducted over the past three months by Levi Itzhak, the editor of Property Prizes magazine, showed that the continuous weakening of the dollar has led to a preference on the part of buyers for the acquisition of second-hand over new or first-hand property. On the back of a weak US currency in recent weeks, only 8% of property purchases were new dwellings compared with 33% in October 2005, when the dollar exchange rate stood at NIS 4.59.

Friedland added that with the weak dollar potential, buyers today need fewer shekels to get to the buying price, and therefore the loan they need to take out could be between 8 to 10% smaller than previously.

Adversely, property sellers are now stubborn about negotiating the asking price, as was once common place.

"There is barely room for price negotiation as sellers have become very hesitant to move prices down," said Friedland. "We hear sellers complain about all the shekels they have already lost, and some even try to increase prices."

Foreign resident buyers, in particular from the US and the UK, have recently shown much interest in buying a second home in Israel, and more so now.

Edwina Baniqued