The impact of the war on the rental market has been erased, and in the past few months the rate of rent increases has increased. This comes through Globes’ analysis of figures issued by the Central Bureau of Statistics. According to the figures, in the first six months of the Iron Sword War, the rate of rent increases slowed down significantly, but since eight months ago, landlords began raising rents more sharply, making it likely that rents will continue to rise. It will rise in the near future.
Data from the Central Bureau of Statistics indicate that the average rent for a four-room apartment nationwide reached 5,200 shekels per month in the third quarter. In Tel Aviv, the average monthly rent for this apartment was 8,500 shekels. It amounted to 5,900 shekels in Jerusalem, 3,800 shekels in Haifa, and 3,000 shekels in Beersheba. Rents in the center of the country are roughly equivalent to the monthly mortgage payment on the same type of apartment.
The problem isn’t just for renters. Rents are an important component of the CPI, making up 25% of the index, so when rents rise quickly, they put upward pressure on the official inflation rate. Last year, the Housing Services Index, which reflects changes in rents, rose by 4%, while general inflation reached 3.4%. It follows that if rents had not risen so sharply, the rise in the CPI would have been closer to 3%.
A close examination of the housing services index since the beginning of the war reveals two trends. From October 2023 to February 2024, the index barely moved. The entire rise was recorded from March 2024 onwards. The annual increase in the housing services index since the second quarter reached 5.5%.
Additional data from the Central Bureau of Statistics reinforces the assessment that the forces driving rents higher have peaked and the upward trend is likely to continue. The figures are for a change in rent when there is a change in tenant. New tenants are the most vulnerable market, as landlords tend to raise rents more in their case than when extending a lease to an existing tenant. The Central Statistics Office began publishing separate data for new tenants in July 2022. Up until the start of the war, it showed that a new tenant’s rent tended to be 6-9% higher than the previous tenant of an apartment. But in November 2023, the gap narrowed to less than 5%, and by April this year it had narrowed to 2%.
The obvious explanation is the war, in which both landlords and tenants were conscripted into reserves, which turned the presence or absence of a reserve area on a property into a bargain, and also made people less interested in looking for an apartment. Or for the tenant, missiles and missiles flying overhead.
But in the past few months, the average rent hike for a new tenant has risen to 4%, and the overall trend is upward.
Published by Globes, Israel Business News – en.globes.co.il – on December 24, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.
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