Sharp rise in number of Israelis renting homes

Rising demand for homes to rent credit: Tali Bogdansky
Rising demand for homes to rent credit: Tali Bogdansky

The number of rented homes in Israel is increasing at almost double the rate that the overall number of homes is increasing, the Central Bureau of Statistics reports.

The number of rented homes in Israel is increasing at almost double the rate that the overall number of homes is increasing, the Central Bureau of Statistics reports. However, between 2013 and July 2022, the weight of rented apartments out of all apartments increased by only 0.4%, while housing prices during this period rose by 80%.

In Tel Aviv, over 107,000 apartments are rented, of which about 18,000 (almost 17%) are owned by real estate companies. However, in most Israeli cities, the weight of the apartments owned by companies is only a few percent, and the market is completely controlled by private owners, according to the Central Bureau of Statistics housing ownership survey.

The report also shows that the average rent in Israel is NIS 4,368 per month in 2023, while apartments with five rooms or more in Tel Aviv are leased for more than NIS 10,000 per month.

The report is based on information from the register of apartments and buildings based on property tax data provided by local authorities for the years 2013-2022.

28% of all apartments in Israel are rented

As of July 2022, there were 2.85 million homes in Israel, of which 801,000 (28.1%) were rented. This figure puts Israel in the mid-range in comparison with EU and OECD countries. In the EU, on average, 30.1% of homes are rented, while in the OECD, only 23.5% of homes are rented.

Switzerland, Germany, Colombia and Austria have the highest percentage of rented homes, while Eastern European countries pull down the rental averages. In Albania, Romania, Slovakia, Hungary and Croatia, the percentage of apartments for rent is in single digits.

Supply of rental apartments has risen but so has demand

The annual growth rate of homes for rent is 3.4%, while the growth rate of homes in general is 1.9%, which means that in the last 10 years the supply of homes for rent has risen greatly, but so has demand.

However, while the Central Bureau of Statistics report provides detailed information about the increase in supply, it does not provide details about the increase in demand. Due the rise in housing prices in the last decade, and rents in the recent period, it can be assumed that the demand for rent is much greater than the number of apartments offered.

The very fact that housing prices have increased by 77% in the last decade, while the percentage of homes for rent rose from 24.3% in 2013 to 28.1% in 2022 indicates a major market failure, a lack of supply, or a mismatch between locations where investors focused their purchases and locations sought by tenants.

Tel Aviv heads the list with 50% of homes rented

Tel Aviv leads the country in terms of the number of apartments for rent. According to the report, there are 107,300 apartments for rent in Tel Aviv, almost half of the city's apartments. Second on the list is Jerusalem, with 74,300 apartments (31% of all apartments), followed by Haifa 42,500 (34%), Beersheva 26,500 (32%), Netanya 23,900 (30%) and Petah Tikva 23,800 rented apartments (27%).

In terms of the landlords renting out apartments, about 78% of all landlords are private individuals, 7% are public housing companies, 5% by real estate companies, 5% kibbutzim and moshavim, and there is no information about the rest.

Segmentation by cities shows that in Tel Aviv the weight of apartments rented out by real estate companies is highest - about 17%. In Herzliya, the percentage is relatively large - 10.4% of all apartments and in the other big cities, apartments owned by real estate companies in less than 10%.

Published by Globes, Israel business news - en.globes.co.il - on August 7, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Rising demand for homes to rent credit: Tali Bogdansky
Rising demand for homes to rent credit: Tali Bogdansky
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