Residential rents in Israel have been on the rise this summer but have yet to return to the levels of last summer. On the other hand, the number of apartments for rent in July was 30% lower than July 2023, with the smaller supply pushing up rents, even in the midst of the war, according to a survey by WeCheck, a fintech company serving landlords and tenants.
WeCheck, which follows the market closely, found that in July, the rent rises that typify the summer are continuing. After a 0.7% increase in rents nationally in June, there was a 0.4% fall in rents in July, but according to the company's findings, the average rents charged to tenants last month was 3% lower than those of July 2023.
The average rent in Tel Aviv for 1-5 room apartments reached NIS 6,727 per month, compared with NIS 7,171 in July 2023, down about 6%. WeCheck CEO Rami Ronen says the city has not yet fully recovered from the declines that hit last year, although rents are back on the rise.
In Herzliya, the average rent is the second highest in the list of cities checked by the company, with an average rent of NIS 6,537, down 1.4% compared from July 2023, while in Jerusalem the rent was the third highest and reached NIS 5,200 per month, up 2% compared to last year.
Sharp fall in supply
Ronen observes that rents are now being affected by a sharp drop in the supply of apartments compared with last year. He says, "We are seeing a sharp fall in the supply of apartments for rent compared with July of last year, at a rate of 29.5%, which is probably due to the small number of new apartments added to the market, a tendency to renew existing contracts and the exit of apartments from the market due to high interest rates compared with the low rental yield. The continuation of this trend may lead to further increases in rents in the coming months."
There may be a situation where the war contributes to further reducing the supply of apartments. The summer, when the academic year ends, marks the end of the rental year, with some contracts renewed and other tenants moving.
Due to the war, with many renters and apartment owners mobilized for months-long reserve duty, and fear of missile attacks from Iran, Yemen and Lebanon, it seems that many prefer to renew existing contracts, rather than start looking for new apartments and tenants.
This significantly lowers the supply of available apartments, and may increase pressure on new tenants or those who have decided to change apartments despite the situation.
Published by Globes, Israel business news - en.globes.co.il - on August 6, 2024.
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