Is the mass evacuation of Israel’s northern border area affecting the rental market in neighboring areas? Our examination of the major northern cities reveals that rents there have already risen by hundreds of shekels a month. The Knesset Research and Information Center estimates that some 68,500 people have been evacuated from settlements on the northern border. Some families are still staying in hotels, and a small percentage have purchased homes elsewhere, but most are renting.
The displaced benefit from government housing assistance that began a few months ago, which amounts to NIS 200 per day for an adult and NIS 100 per day for a child. A family of five thus receives monthly assistance of about NIS 20,000. “Until five months ago, everyone was staying in hotels,” says Nati Shenfeld, the Anglo-Saxon Agency’s franchise owner in Karmiel, Ma’alot and Kfar Vradim. “When the government started providing rental assistance, people left the hotels, which created an imbalance in the rental market in the Western Galilee. They were stunned by the large sum, but they ignored the fact that the grant is intended to cover all housing expenses, including living expenses, and fixed expenses such as local taxes, electricity and water.”
Everyone interviewed for this article found that the question now is to what extent the price increases are explained by the market’s response to a flood of demand, and to what extent by the exploitation of the plight of the displaced. But it is important to stress that the ability of the displaced to absorb the price increases lies in government subsidies that are not available to ordinary tenants. At some point in the future, the subsidies will end, and this should help to reduce housing costs somewhat.
Rural Renaissance
“The aid took people by surprise, and the first ones to jump on the bandwagon were extravagant and thoughtless,” says Sheinfeld. “Most of the displaced in the Western Galilee were residents of rural settlements who were looking for similar homes, homes with land. Then suddenly, rents for homes with land in the Western Galilee went from NIS 6,000-6,500 a month to NIS 8,000-8,500. This shocked the entire market, including us real estate people. The rumor of rising rents also reached apartment owners in multi-occupancy buildings, who realized that they were on the road to success and started raising prices.”
But then it turned out that not all the tenants were displaced, and the market was unable to pay these prices, says Shenfeld. “Prices gradually dropped to a level that was probably high compared to the period before the war, but this level was much lower than the peak levels recorded in the first months of the grant distribution. Today, the rents of these houses and land are about 7,000 shekels a month.”
The sudden demand that hit the rental market in the north has also spread to the urban market. “We are clearly seeing a revival in the settlements that are not on the border fence,” says Michal Kurland, a franchisee and partner at RE/MAX Pioneers in the north. “In the other settlements, there is a significant increase in the number of transactions, both for buying homes, but mainly for rent.” The market has calmed down a bit in the past few weeks, Kurland says, in anticipation of a Hezbollah attack. “But in the last couple of days, things have returned to how they were before.”
Shenfeld and Kurland say the displaced are trying to rent places close to their homes. For example, evacuees from kibbutzim and moshavs are renting homes on land in Kfar Vradim, a settlement not far from the border but not directly on the fence. Evacuees from Shlomi are renting in Nahariya.
“Prices are going up because the market is going up, but we don’t see any greed or exploitation by landlords,” says Kurland. “Most landlords are aware of the situation, they understand the needs of the displaced, and some are willing to allow flexibility in these rental agreements. They are also uncertain about the future, because the war will end and the displaced will return to their homes, and many homes will remain empty.”
Some of the displaced are renting apartments in Nahariya that were sold under a government-backed “buyer’s price” scheme to young couples who bought as investments but have had trouble leasing them because of the oversupply, Kurland says. Rents in Nahariya are currently NIS 3,900-4,200 for a three-bedroom apartment and NIS 4,500-4,800 for a four-bedroom apartment. Kurland estimates that prices have risen 7-10 percent since the war began.
Rents up 20%
Most of the displaced from the Galilee and Western Galilee appear to be concentrated in Tiberias. Data sent to us by the Yad2 website specifically indicates that rents for three-bedroom apartments in Tiberias have risen by 17% compared to the period before the war, and rents for four-bedroom apartments have risen by 7%. “I estimate that rents have risen by at least 20% since the beginning of the war,” says Zvi Sarousi of Zvi Real Estate Brokerage. “Apartments that used to cost NIS 4,000 are now renting for NIS 5,000, and apartments that used to cost NIS 3,000 are now costing NIS 4,000.” Sarousi says that part of the increase can be explained by short-term rentals signed by the displaced, but part is due to landlords exploiting the plight of the displaced.
In Afula, too, rents are rising, especially for furnished apartments, “and unfortunately there are landlords who are taking advantage of this situation,” says broker Maor Shem-Tov. “The evicted families mostly prefer to rent large apartments in the newer neighborhoods, Jezreel and Lev HaEmek. A four-room apartment that used to rent for NIS 3,500 now costs NIS 4,000, and a five-room apartment that used to rent for NIS 4,000 now costs NIS 4,500-4,800.”
To put things in perspective, a Central Bureau of Statistics survey of the rental market in Israel found that average rents have risen by 3.5% since the war began. The housing services index, which is based on changes in rents, has risen by 2% during this period, so the figures from the north, especially Tiberias, are exceptional.
This article was published in Globes, Israeli Business News – en.globes.co.il – on August 28, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.