A Tel Aviv family who rented a large, old apartment in north Tel Aviv last year for NIS 13,000 a month is already being pushed out. The unit is not protected, and during the war they repeatedly had to take their children to a nearby public shelter. They now say the rent, once manageable, has become a financial burden and that they will probably move to a smaller, safeguarded apartment in a less desirable area, even if it means paying more per square meter.
That personal story reflects a broader market shift, according to broker Li Yermiyahu of the Tel Aviv-based agency Niche Tel Aviv. She says the economic slowdown, spending cuts and layoffs in tech have reduced home purchases and kept more people in rental housing, while uncertainty makes renters reluctant to commit to transactions that will only close years later. With supply tight, she says, prices are rising. She cited a three-room apartment on Nordau Boulevard, in a maintained building with an elevator but no protected room, whose rent rose from NIS 7,200 to NIS 8,600 and was rented within five hours.
Nationwide, the first summer reading of the Central Bureau of Statistics, for May, showed a 0.8% jump in the housing services index, which tracks rent changes. The article says this was the biggest May increase in 15 years. The rise reflects both seasonal demand after Passover and war-related pressures, including displaced residents and strong demand for apartments with protected rooms. Yermiyahu says a Tel Aviv apartment with a protected room can command NIS 2,000 to NIS 2,500 more than one without it. WeCheck CEO Rami Ronen says the gap between protected and unprotected rentals has widened from 7% before October 7 to 20% after the war with Iran, especially in the Tel Aviv metropolitan area and in older small apartments.
The article also points to structural reasons for the climb, including the absence of a government rental policy, fewer investors buying homes to rent out, and lower homebuying activity overall. Globs’ review of long-term data found that since the Bank of Israel began raising rates in April 2022, monthly rent growth accelerated from 0.2% over the previous 12 years to 0.3%, an increase of 50%. Ronen says higher interest rates make rental yields less attractive, push investors to sell, and discourage new purchases for investment. He warns that supply remains low in most of the country, and even if rates fall soon, they are unlikely to return to 2021 levels.
The hardest hit, the article says, are new renters, people who have just moved or are entering the market for the first time. In the Nordau example, the new tenant will pay 20% more, but CBS data show that in May new renters paid about 7% more on average than the previous tenants in the same units. With the summer just beginning, the article says the season could bring further rent increases.
