Rents Jumped Sharply in May, Led by Tel Aviv

Israel’s rental market heated up in May, with the housing services index, which tracks rent changes, rising 0.8% month on month. New tenants were hit hardest: rents for people moving in or signing new leases jumped 6.8% compared with the previous tenants’ payments, the steepest annualized increase since October 2023.

The article says the typical impact on new renters was about 270 shekels a month nationwide, and nearly 500 shekels in Tel Aviv. Existing tenants who renewed yearly contracts saw a smaller, though still significant, increase of 2.5% on average. By contrast, the housing price index was almost flat, falling 0.3% in March-April, after a 0.1% drop in April and indicating that the broader home-buying market is still moving only in fractions of a percent.

The pressure on rents is being driven by the summer leasing season, which begins immediately after Passover, government inaction on rental policy, thousands of evacuees from homes destroyed in the war joining the rental market, and a slowdown in investment apartment purchases. The article notes that the May rent increase came after April’s decline, reflecting a seasonal rebound.

In the housing market, prices are still down 1.3% over the past year. The sharpest declines were in new apartments in Jerusalem and Haifa, where prices fell by about 2%. Nationally, new-home prices excluding units sold under the government’s discounted “Apartment at a Discount” program fell 0.7%, suggesting most of the weakness is in new construction. Tel Aviv rose 0.7%, helping keep the national index from falling further, while the south dropped 0.9%, the north 0.2%, and the central district rose 2%.