Cost of purchasing apartments in Israel down at least 15 percent

In addition, the Ministry of Construction and Housing has initiated a number of assistance programs for home buyers, such as grants and loans at rates of 4 to 4.5 percent.

"For the immediate future, I believe that these conditions will bring some stability to the market," David Baruch, managing director of the mortgage bank said in an interview. "The environment is very favorable to buyers right now, and I believe that many potential buyers who have been sitting on the fence, waiting to see what will happen in the market, will take advantage of the present circumstances.

"This should help stabilize, if not slightly lift the real estate market."

Baruch believes that supply-side factors will also be rejuvenated and help stop or slow the market's deterioration. "Inventories are low right now, and this should positively impact the number of housing starts," he said.

Baruch dubbed the last 12 months a "deep recession" for the properties market, which saw the number of apartment sales fall by 9 percent, the value of all dwelling sales slide by 16 percent and housing starts plummet 34 percent.