Home rental prices were stable in several of Israel’s largest cities over the course of 2020, according to Central Bureau of Statistics data released on Monday. The nationwide average rental price for 3.5-4 room apartments – three-bedroom homes – was 4,052 shekels on average in 2020, a 2.6 percent increase on 2019. The figure covers major cities with 100,000 or more residents.
The highest average rental prices are still in Tel Aviv and its neighbor, Ramat Gan. The most significant price increases were inthey went up by 3.7% on average. Prices remained stable in Be’er Sheva, increasing only 0.8%. They increased by 1.9% on average in Haifa, and a mere 0.8% in Jerusalem.
The not-so-mysterious death of the Israeli left, six weeks to the election. LISTEN
Several months ago, there were forecasts that rental prices would drop, as they did in many major cities around the world, as young people lost their jobs and students switched to remote learning. The only major city in Israel where rental prices dropped was Ashkelon, where they declined by 2.6%.
Home rental prices do not necessarily correlate with the official home price index published this week.
The home price index increased in Israel by 4% on average during 2020, a significant figure given how high prices have been for years. And yet, this is still less than some forecasts that had predicted sharp spikes due to the coronavirus crisis.
Meanwhile the price of an average home was 1.547 million shekels ($475,000) as of the final quarter of 2020, a 2% increase from the final quarter of 2019. This was also the average price in 2020.
The Central Bureau of Statistics explains that the discrepancies in numbers stem from different measuring methods. “The home price index reflects net price changes. It does not reflect differences in quality across various apartments. The average home price does not control for differences in quality such as location or size. The difference in the changes in home prices is a general indication that homes sold over the past year were of lower quality, and thus the annual index increased more than prices did last quarter,” a statistics bureau source said.
- Five significant reasons to start worrying about Israel’s economy
- Israel's economy will return in April, analysts say, but not to normal
- Israel’s economy shrank far less than expected in 2020
One of the reasons that the index reflects a drop in quality is the large number of apartments sold through the Mehir Lemishtaken subsidized homes program.
The index reflects significant variants in different parts of the country. The statistics bureau acknowledges that its figures are not accurate, as they compare apartments based on the number of rooms, without taking into account the apartment’s quality or location. For instance, the index found that home prices increased by 17% in Tel Aviv, a figure that is most likely overblown.
However, the statistics do indicate that there’s no one clear direction in the housing market, and that prices were likely stable and may have even declined in some areas. The statistics bureau found price decreases in Haifa, Bat Yam, Holon and Petah Tikva.
Figures regarding rental rates are more accurate, as differences in quality are less significant. In this regard, 2020 played into the hands of renters, as rental prices increased more moderately than home prices.