3 of 10
Annual increase: 16.2%

Skip Nantucket. Let's vacation in Israel.

Israel has become one of the hottest real estate markets in the world. From Tel Aviv's beachside high-rise condos to the heart of Jerusalem, much of the demand has been coming from North American and European Jews in search of vacation homes. Similar to many other robust real estate markets, Israel's housing market is fueled by a shortage of properties and record low interest rates.

So far, Israel has dodged a housing market crash like the ones in the U.S. and parts of Europe mostly because it didn't experience the same credit booms in the years leading up to 2008. But that doesn't mean Israel's government isn't worried about it. Officials have been trying to bring the market boom to a soft landing by raising borrowing costs and putting tighter restrictions on some loans.

NEXT: China
Last updated April 28 2011: 12:31 PM ET
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