"As a high-tech hub, the higher income of people in Tel Aviv has put a lot of pressure on prices, particularly on real estate prices. So the city comes unaffordable for the working-class residents," said Bental, who is also professor emeritus of economics at the University of Haifa.

Tel Aviv consistently ranks as one of the world's most expensive cities in 2026 due to a combination of high demand, a powerful tech economy, and limited housing supply. As the "Silicon Wadi," the city attracts high-earning tech professionals and international investment, which drives up the cost of real estate and local services. Additionally, the Israeli Shekel has historically been a very strong currency, increasing the "sticker price" for those converting from USD or EUR. Israel's geographic "island economy" also plays a role; because it has limited trade with its immediate land neighbors, many goods must be imported by sea or air, which adds significant logistics costs to everything from groceries to electronics. High import duties and a lack of market competition in certain sectors further inflate prices. For travelers, this means that even basic items like a cup of coffee or a mid-range hotel room are priced at a premium compared to other Mediterranean destinations like Athens or Madrid.