Residential rent trends mixed in 2019

rental housing  photo: Shlomi Yosef

Figures newly published by the Central Bureau of Statistics show wide variations between different cities in Israel and different apartment types.

Ashkelon is the Israeli city in which rents rose most steeply in 2019. The average monthly rent in Ashkelon in the quarter was NIS 2,884 in the fourth quarter last year, which was 5.7% higher than the average in the fourth quarter of 2018. Nevertheless, tenants in Tel Aviv still pay almost double - NIS 5,771 monthly for rented apartments in the city. Rents in Tel Aviv were 3.4% higher in the fourth quarter of 2019 than in the fourth quarter of 2018. The nationwide average monthly rent in Israel crossed the NIS 4,000 mark in the fourth quarter last year, reaching NIS 4,001.

Data on the rental market were previously available only from private sources such as the Yad2 website, but the numbers presented here bear the imprimatur of the Central Bureau of Statistics. They come from figures released for the first time alongside the monthly Consumer Price Index reading, although they do not form part of the index. Their publication is one of the recommendations of the committee set up three years ago to examine ways of improving the information available on the housing market. The committee was headed by Prof. Danny Ben-Shahar, professor of Finance and Real Estate at the Coller school of Management at Tel Aviv University, and director of the Alrov Institute for Real Estate Research. Another factor was Minister of Finance Moshe Kahlon's insistence that official housing market data should be published solely by the Central Bureau of Statistics, and not by, for example, the government assessor in the Ministry of Finance Chief Economist's Department, who in the past published his own figures on the market. The data now released by the Central Bureau of Statistics covers rents by home size for each quarter since 2017 in fourteen towns and cities.

Varying trends

The outstanding feature of the data is the large variations in price movements between the cities and between apartments of different sizes within each city. This is by contrast with the Housing Services Index, which reflects changes in rents on a national basis only. While this general index shows a 2.8% rise in rents in 2019 in comparison with 2018, it is now possible to see the variations in the detailed figures, and which places and types of apartment are responsible for the rise.

As mentioned, the rise in rents in Ashkelon was double the rise in the general index. This may reflect a change in the mix of housing available in Ashkelon, which has seen intense and rapid construction in the past few years. In the period 2017-2019, rents in the city rose by nearly 16%, representing the steepest rise of any Israeli city in that period.

Most expensive place to rent - Tel Aviv

Tel Aviv is the most expensive city in which to rent. The average monthly rent for a small apartment (up to two rooms) is NIS 4,513, considerably more than the average monthly rent in Beersheva for large apartments (4.5-6 rooms), which is NIS 3,817, and close to the rent paid in Holon for an apartment with 3.5-4 rooms, which is NIS 4,527.

Rents for small apartments in Tel Aviv rose by 3.8% last year, more than the 3.4% average rent rise for the city. Rents for 3.5-4 room apartments also rose by more than the average, and were up 3.6%, at NIS 6,989 in the fourth quarter of 2019. Rents for large apartments, of 4.5-6 rooms, rose by just 1.1%, and mid-size apartments, of 2.5-3 rooms, rose 2.6% in 2019, to an average of NIS 5,673 monthly.

The second most expensive place in which to rent among Israel's large cities is Ramat Gan. The average rent rose 2.2% in Ramat Gan last year, which is less than the nationwide average rise. The average rent in the city in the fourth quarter of 2019 was NIS 4,516 monthly.

The average rent in the city was pulled upwards by rents for large (4.5-6 room) apartments, which rose 4.6% in 2019.

Rents for small apartments of up to two rooms rose to an average of NIS 3,381 monthly in the fourth quarter of 2019, and rents for 2.5-3 room apartments rose 2.8% last year to NIS 4,321 monthly. Monthly rents for 3.5-4 room apartments rose 1.5% to NIS 5,303.

Jerusalem third, Haifa second to last

Jerusalem is the third most expensive city in which to rent an apartment. Last year, rents in Jerusalem rose 3.2% on average to NIS 4,351 monthly. Rents for apartments with 4.5-6 rooms were at a standstill in the city last year, at NIS 6,285 monthly. By contrast, rents for apartments with 3.5-4 rooms underwent the steepest rise, amounting to 3.3%. The average monthly rent for such apartments in Jerusalem was NIS 5,037 in the fourth quarter of 2019, the third highest figure for apartments of this size in the country.

Rishon LeZion places fourth as far as rents are concerned, but there too the rise in rents last year was less than the average rise nationwide, at 2.2%. The average rent in the city last year was NIS 4,117 monthly. The main driver of the average rise in rents was large apartments of 4.5-6 rooms, for which the average monthly rent rose 4.1% last year to NIS 5,743.

Israel's third-largest city, Haifa, was second to last in 2019 for rent levels, and last as far as the rise in rents was concerned. The average rent in Haifa rose just 0.9% in 2019 in comparison with 2018.The average rent in the city in the fourth quarter of 2019 was NIS 2,687 monthly. Monthly rents for small apartments and for apartments with 2.5-3 rooms rose by less than 1% last year, reaching NIS 1,992 and NIS 2,545 respectively.

As mentioned, this is the first time that the Central Bureau of Statistics has published detailed figures on rents, and they cover only the last three years. This is a positive step, one that will make it possible to understand trends in the market better, but nonetheless, despite the welter of government statistics, it is difficult at present to give a general picture of the rise in residential rents that began in 2008.

Published by Globes, Israel business news - en.globes.co.il - on February 17, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

rental housing  photo: Shlomi Yosef
rental housing photo: Shlomi Yosef
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