Israel's Rental Market Faces Shortage of Larger Apartments

Israel's rental market is experiencing a significant shortage of larger apartments, driving up rental prices despite a slight slowdown in overall housing prices. While the supply of smaller rental units has increased, larger homes suitable for families are becoming increasingly scarce, with their availability dropping by approximately 16% and by 25% compared to the previous year. This scarcity is particularly acute in cities like Ashkelon, where the supply of rental units has fallen by nearly 50%, and also affects Ashdod, Beersheba, and Rehovot.

Nationally, rental prices have risen by 4.8% compared to July 2025. This trend is more pronounced in larger apartments (4-5 rooms), which have seen a 4.8% annual increase in rent, while smaller apartments (1-3 rooms) have experienced a 3.1% rise. Jerusalem, Netanya, and Petah Tikva are noted as cities with significant rent increases.

The overall supply of rental apartments has decreased by 9.4% compared to a year ago. Data from WeCheck indicates a 2.5% increase in the total number of rental apartments in June 2026, reaching about 16,000 units. However, this figure masks a sharp divergence: the supply of small apartments surged by over 14%, while the supply of large apartments plummeted by about 16%.

This "pincer movement" in the market, where rental prices rise while housing prices stagnate or slightly decline, is reminiscent of patterns seen in 2022. Experts suggest that the lack of sufficient rental housing, especially for long-term leases (10-20 years), is a key factor. The situation may push renters to consider purchasing homes, though the overall housing market is experiencing a mild slowdown with a relatively high number of transactions continuing.