Sharp Rise in Rents in Israel Amid Economic Challenges
Recent reports indicate a significant increase in rental prices across Israel, particularly affecting new tenants. According to the Israeli Globes platform, the average monthly rent for a four-room apartment reached 5,200 shekels (approximately $1,425) in the third quarter of 2024. This marks a notable rise after a period of stagnation during the first half of the ongoing war.
Regional Disparities in Rental Prices
The rental market in Israel shows stark differences between regions. In Tel Aviv, the average rent surged to NIS 8,500 ($2,330), making it the most expensive city in the country. Jerusalem follows with an average rent of NIS 5,900 ($1,620), while Haifa's average rent stands at NIS 3,800 ($1,050). Beersheba remains the most affordable option with an average rent of NIS 3,000 ($822). This disparity highlights the growing challenges for tenants, especially in central Israel, where rents are nearly equivalent to monthly mortgage payments.
Economic Implications of Rising Rents
Rents constitute about 25% of the consumer price index (CPI) in Israel. Over the past year, the housing services index, which tracks changes in rents, increased by 4%, surpassing the overall inflation rate of 3.4%. Without these rent hikes, inflation would have been closer to 3%, underscoring the significant impact of housing costs on the broader economy. After a temporary halt in rent increases during the war, the housing services index has seen an annual rise of 5.5% since March 2024, indicating a resurgence in rental prices.
New tenants are particularly vulnerable, facing rent increases of 4% on average, a trend that has accelerated recently. During the war, landlords had reduced their rent increases, but as conditions have stabilized, they are regaining control over pricing, especially in high-demand areas. The Central Bureau of Statistics (CSO) data suggests that the upward pressure on rents will likely persist due to limited supply and high demand, compounding the economic challenges for many households.
