Israeli Housing Market Sees Falling Prices, Rising Rents
Translated & summarized from Globes by baba
Israeli apartment prices fell 0.6% in July-August, continuing a year-long decline, with the North and Tel Aviv regions seeing the sharpest drops. Meanwhile, rental costs rose 0.4% in September, with new tenants paying 5.2% more than before. Experts anticipate these diverging trends to continue due to record housing supply and low sales, unless major economic shifts occur.
The story in 6 lines · by baba
- Israeli apartment prices fell 0.6% in July-August, continuing a downward trend.
- Rental costs increased by 0.4% in September, with new tenants paying 5.2% more.
- The Northern region saw the sharpest apartment price drop at 1.5%.
- Apartment prices are down 1.8% year-over-year and 3.3% from last year's peak.
- A record 86,000 apartments are available for sale, contributing to price drops.
- Experts predict falling purchase prices and rising rents will continue.
Israel's housing market is experiencing a divergence, with apartment prices declining while rental costs are on the rise. The national apartment price index for July-August fell by a notable 0.6%, following two months of near stagnation. This marks a continuation of a downward trend observed over the past year, with prices down 1.8% annually and 3.3% from their peak early last year. The most significant price drops were recorded in new apartments and in the Northern, Tel Aviv, and Central regions, with the North seeing a 1.5% decrease.
Despite the overall price decrease, the impact is not always immediately apparent to the public, as drops can amount to tens of thousands of shekels, which may seem minor relative to the high cost of housing. However, appraisers and real estate agents report more substantial reductions, sometimes presented as 'special offers.' Some beneficiaries of the "Apartment at a Discount" program are finding that their promised discounts are shrinking compared to current market prices, with some in places like Harish considering forfeiting their discount to buy a resale apartment instead.
In contrast to the falling purchase prices, the rental market is heating up. The rent index rose by 0.4% in September, and new tenants signing leases in September paid an average of 5.2% more than previous tenants. Over the past year, rents have increased by nearly 4%. This trend is expected to continue, driven by a record high supply of apartments for sale (around 86,000 units) and low transaction volumes, coupled with an increasing number of renters as fewer people buy homes.
Experts predict these trends will persist unless there is a significant development, such as a sharp interest rate cut or a major international agreement impacting the region. The overall inflation rate in September was surprisingly positive, at 1.6% annually, and the consumer price index saw a 0.5% decrease that month.
