Safaa Othman scraped together enough money to buy her new olive-green Nissan Juke just two weeks ago. But when she woke up earlier this week, she found it had been ravaged by hate-filled extremists.

Now she can no longer drive it and is not even sure if she can afford to cover the cost of the repairs.

"I can't afford new tyres by myself," said the 27-year-old, staring sadly at her stranded vehicle outside her house in the Arab village of Abu Ghosh, just outside Jerusalem.

Suspected Jewish extremists slashed the tyres of 28 cars in the village in the early hours of Tuesday morning and scrawling abusive, racist graffiti on nearby walls in an incident that sparked widespread condemnation in Israel.

"Arabs OUT" and "Racism or assimilation" were two of the slogans, the latter being a negative reference to the effect of Jews and non-Jews mixing.

"I bought the car for 134,000 shekels ($37,000/28,000 euros) with a bank loan so I need to check if it's insured against vandalism," she said.

"I was shocked," Othman told AFP.

"I don't have any enemies who'd want to do this. I had to miss a day of work to deal with the car issue."

The village is known for its for excellent relations with Israel's Jewish majority and it attracts hordes of Israelis to its restaurants.

Othman said women friends of hers in east Jerusalem had been assaulted last week by Jewish extremists who forcibly pulling off their headscarves on a bus.

But until now, she had never experienced anything like that herself.

Arab-dominated Abu Ghosh, a leafy village in the hills just west of Jerusalem, is famous for its twice-yearly classical music festival held in its ancient churches. It has never before been hit by the "price tag" phenomenon that usually take place in West Bank and east Jerusalem.

And the incident has left a residue of fear in what is a normally peaceful village.

"The children didn't even answer the door to their father when he got home from work. They were afraid a price-tagger might have rung the bell," said 34-year-old mother Suhad Abdel Rahman.

Nidal Othman, who heads The Coalition Against Racism in Israel, told AFP Israelis working to combat racism said it was likely the attackers were Jewish settlers from the West Bank.

"There's a secretive organisation calling itself 'price tag' made up of settlers from the West Bank. It has previously set cars alight in east Jerusalem," he told AFP.

Initially carried out against Palestinians in retaliation for state moves to dismantle unauthorised settler outposts, price tag attacks have become a much broader phenomenon with racist and xenophobic traits.

They tend to involve the vandalism or destruction of property and have included arson attacks on cars, mosques and olive trees, but also target Christian holy sites and have even reached Israeli army bases.

Last week, police figures showed that in 2012 they opened 623 files on price tag attacks, arrested 200 people and served 123 indictments in connection with such acts.

So far this year, police have opened 165 files on attacks, arrested 76 suspects and served 31 indictments.

Police officials say such attacks are considered to be ideologically motivated "nationalistic crimes" and are a "top priority" for police.