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When I looked over into the neighbors yard I saw they have a lush garden next to the wall. My guess is they never coated the wall to prevent water seepage when watering
In my opinion based on what you have shown, this is efflorescence due to repeated seepage of water through the masonry. It is not physical damage; nor would I expect it to damage the wall unless they're watering when its freezing out. It is cosmetic. There are acid based cleaners that can be periodically used to clean it.
Agree on the efflorescence, and a diluted mix of muriatic acid and water will fix it. Read up on using muriatic acid though if you’ve never used it before, some needed rules there for safety.
Water is likely getting between the horizontal gaps of the block stack and soaking down into the concrete, then through it and out the sides.
Spray their side with a water sealer. That should help quite a bit, or have them to put a clear plastic sheet on their side of the wall to keep drier.
I’m guessing it’s not your wall and that it was built and belongs to your adjacent neighbor?
If it was probably constructed, there should be crushed stone or a vertical drainage mat, on their side of the wall that drops into a pipe to allow water to be piped away rather than building up in the soil and adding to the ground pressure against the wall.
Regardless of how the wall and backfill was constructed, after a significant rainfall the block wall will be wet and since the masonry is porous, it will wick water from the drainage mat or soil. Moisture will also cause efflorescence that is obviously visible.
Put in your own garden that blocks the cosmetic issue that seems to be keeping you up at night. Next time, wait until you hear them in their garden before scaling the wall, but this time instead of taking video of their private property and putting it on the internet, talk to them and swap garden advice.
Just an idea.
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