Israel's Housing Market Sees Mixed Signals: Rents Rise, New Homes Steady, Resale Prices Dip

Israel's housing market is showing divergent trends, with apartment prices experiencing modest increases after a prior significant drop, largely driven by the new construction sector. However, rental prices continue to climb, placing a burden on tenants and contributing to the consumer price index. A new index launched by the Central Bureau of Statistics (CBS) indicates that sellers of pre-owned homes are facing pressure and are lowering their prices.

The overall apartment price index rose by 0.2% in the past month, but on an annual basis, it has decreased by 1.2%. In contrast, the housing services index, which tracks rental price changes, saw a monthly increase of 0.7% and an annual rise of 3.6%, highlighting the diverging paths of apartment purchase prices and rental costs.

The CBS's new quarterly index for pre-owned apartment prices revealed a 1.2% decrease in the second quarter of the year compared to the first. While pre-owned home prices generally tempered the overall price declines in the second quarter, the general index, including new apartments, fell by 1.4%. Specific regions like the North, Haifa, and the South saw modest increases in pre-owned home prices, while the general apartment price index in these areas declined. Jerusalem stands out, with pre-owned apartment prices falling 2.9% in the second quarter, outpacing the overall index drop of 2.3% in the city.

Annually, the Central district saw the largest price drop at 3.2%, followed by Haifa at 2.4%, Tel Aviv at 0.9%, and the South at 0.6%. Jerusalem and the North experienced annual price increases of 1%. The article dismisses a connection between recent modest price increases and upcoming elections, noting that housing issues are not a prominent topic in the current political discourse.

The significant rise in rental prices, which constitute a quarter of the consumer price index, is attributed to a lack of government policy. The housing services index's 3.6% annual increase has notably contributed to the overall consumer price index rise of 1.5% over the past year. The Ministry of Housing recently published recommendations on rental policy, but these are considered late and politically insignificant.