Tenants Rejoice: Rent Hikes Lag Increase in Home Prices

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The cost of renting an apartment rose between 1% and 3% in most Israeli cities over the 12 months that ended in August, a survey by TheMarker and the classified ads website Yad2 has found.

That was in contrast to a 9.3% jump in housing prices in the 12 months through the end of June, which was reported this week by the Central Bureau of Statistics. Meanwhile, consumer prices have risen 1.3% in the 12 months through August. In some parts of the country, the survey found, rents didn't go up at all in the past year.

In Petah Tikva, rents actually declined by 4.2% overall. This means that tenants should on average expect to be paying NIS 1,545 less on housing over the coming year, depending on an apartment's size, according to figures from TheMarker/Yad2 survey.

The cost for a two-room unit there dropped 6.2% to an average NIS 2,597 a month – a savings of NIS 2,049 for the year. A three-room unit was 8.4% cheaper to rent than last year at an average of NIS 3,226 a month, with savings reaching NIS 3,569 on an annual contract.

Four-room apartments in Petah Tikva were the only exception, with rents for these actually climbing 1.9% to an average of NIS 4,322 a month.

The prize for the steepest increase of all in rental costs goes to Tiberias. The town registered a 10% rise driven by a 13.1% jump in the cost of renting a four-room apartment, which now averages NIS 2,530 a month. The average cost of a three-room apartment in the city rose 6.7% to NIS 1,908 a month.

Meanwhile, rent increases in the three largest cities were comparatively steep. Average prices rose 3.4% in Tel Aviv, 3.6% in Jerusalem, and 4.4% in Haifa. In Tel Aviv, a rise in August of 4.2% in rent to an average of NIS 6,238 a month for a four-room apartment was mainly responsible for the increase. In Jerusalem and Haifa, however, the cost of three-room units was the culprit. These cost 6.2% more to rent this year in Haifa, NIS 2,366 a month on average, and 5.2% more in Jerusalem, where monthly rents reached NIS 3,966.

Tel Avivians will pay an average NIS 2,058 more on rent this year. The cost of a two-room apartment rose 3.3% to NIS 4,155, and rent for a three-room unit rose 2.8% to NIS 5,039. Jerusalemites will also have to pay more than last year: NIS 1,692. The price rose by 2.1% to NIS 3,242 a month for an average two-room apartment in the capital, and by 3.5% to NIS 4,805 for a four-room apartment.

As a result, the average household will spend over NIS 1,000 more on rent this year in seven cities, between NIS 500 and NIS 1,000 in 13 cities, and by up to NIS 500 in three cities. Meanwhile, rent will decline in six cities.

Ramat Hasharon leads

Tenants in Ramat Hasharon will foot the largest rent increase in nominal terms, an average of NIS 2,158 for the year. This was thanks to a 10.4% surge in the price of three-room apartments, apparently due to short supply and robust demand, which brought the average cost of a unit this size to NIS 4,809. Meanwhile, the cost of a two-room apartment rose 3.3% to NIS 3,329 a month, and rent actually dipped 0.3% to NIS 5,705 on four-room apartments.

Runner-up to Petah Tikva on the list of cities where prices dropped was Ashkelon, with a 2.5% overall decline. Here the cost of two-room units fell 4.8% to NIS 2,098. Rent for a three-room apartment in the coastal city edged down 0.5% to NIS 2,399 while the cost for a four-room apartment declined 2.2% to NIS 2,780 a month.

In Hadera, rents dropped an average of 1.5% since August 2012. Prices for two-room and four-room apartments fell by 2.6% to NIS 2,203 and NIS 3,299 respectively, while three-room apartments cost marginally 0.3% less to rent at NIS 2,630 a month.

In terms of prices, our August index indicates a very moderate changes in housing prices compared to July: 20 of the 31 cities surveyed recorded fluctuations of up to 1% in either direction. Price declines were recorded in 12 cities.

Hod Hasharon registered the steepest increase for the month in overall prices at 4.0%, with two-room units reaching NIS 816,507 on average; three-room units reaching NIS 1,157,955; four-room homes - NIS 1,633,014; and five-room homes – NIS 2,004,153.

Ramat Hasharon also stood out with a 3.7% climb. The cost of buying a two-room unit stood at an average NIS 1,227,438 in August while prices for three-room units reached NIS 1,740,731; four-room homes reached NIS 2,454,877; and five-room homes cost NIS 3,012,803.

In contrast, nearby Ra'anana registered a 2.9% drop in prices. The average cost of a two-room unit in August came to NIS 900,270; for a three-room unit – NIS 1,276,746; four-room homes – NIS 1,800,539; and five-room homes – NIS 2,209,753.

But the sharpest drop in prices for the month, at 4.2%, was seen in Hadera, where two-room units went for NIS 457,236; three-room units – NIS 673,971; four-room homes – 950,471; and the price for five-room homes came to NIS 1,166,488.

In the large cities prices changed moderately during the month, climbing 1.2% in Tel Aviv, dropping 0.4% in Jerusalem, and rising a marginal 0.1% in Haifa.

Ramat Hasharon city hallCredit: Nir Kedar

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