August is the most active month in the residential rental market, as the new academic year approaches. Added to the pressure this year is the expectation that promised government programs will make buying an apartment cheaper, which is encouraging potential buyers to continue renting meanwhile and to renew leases.
According to figures from the Central Bureau of Statistics, rents rose 1.1% nationally in the second quarter of 2014 in comparison with the first quarter, and by 6.6% in comparison with the corresponding quarter of 2013.
Since 2007, on a nationwide average, rents have risen by 64.2%. In Tel Aviv, the rise is 85% in seven years, on average, from NIS 3,067 monthly in the second quarter of 2007, to NIS 5,671 monthly in the second quarter of 2014. In 2007, rents for large apartments (4.5-5 rooms) in Tel Aviv were the highest in the country (NIS 4,849 monthly), and they remain high today (NIS 5,671), but they have risen by less than the national average rise, just 68.5% in seven years.
In the Sharon region too, renters are paying much more than they did seven years ago. The rise in rents for large apartments was the steepest in this region. Average rents rose 73%, and rents for large apartments rose 78%.
The lowest rents in the second quarter of 2014 were for small apartments (1.5-2 rooms) in Haifa and the Krayot: NIS 1,654 monthly. In 2007 too, this region had the lowest rents nationwide: NIS 1,250 monthly. It is clear though that even here rents have risen substantially, by 32.3%, and they also represent the highest returns for landlords. Renting out a small apartment in the Krayot yields a 5.5% annual return on investment, while renting out an apartment in the North yields an average return of 5.2%.
Returns of over 4% were achieved in the second quarter on small apartments in Haifa (4.5%), the central region (4.2%) and the south (4.7%). The lowest return is obtained on renting out large apartments in Tel Aviv and in Haifa: just 2.5% in both cities, which are very different from each other in apartment prices.
Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2014
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