Monday, June 5, 2023

Rapid rise in apartment rents fuels inflation in Israel

Apartment rents have increased by 7.2% over the past 12 months, according to housing rental data from the AJN Agency – Consumer Price Index (CPI). Rent data represents 26% of the CPI, so clearly rising rents are one of the biggest factors driving inflation.

In April, CPI housing rental data showed a further 0.5% increase, and on an annual basis, rents rose 5.8% in the first four months of 2023. Additionally, July, August and to a lesser extent September are also the summer months with the highest demand for rental housing, so rents can be expected to rise further, while January and February tend to see a drop in rents.

Around January 2022, rents decreased by 0.1% and remained unchanged the following month, but they have not stopped rising since then. In addition, data from the Central Bureau of Statistics shows that tenants who renew a lease pay an average increase of 3.6%, while new tenants who sign a lease pay an average of 9% more rent than previous tenants: Rent higher than the national average of NIS 430 per month. ,

Some insist that the CPI rental figures from the Central Bureau of Statistics only tell part of the story. Rami Ronen, CEO of WeCheck, which provides financial management risk reports to tenants, explains: “The sample size is small and we must not forget that the price did not increase over a month, but in relation to the signed price. between the owner and the tenant. Therefore, it is an annual increase. And if the owner of the apartment did not increase the rent for the tenant last year, then the increase is relative to the previous contract signed between them, and certainly not in a month ..

“I make these points because, in reality, the rental market is in trouble and it will get worse over the summer. We monitored all rental listings and found that apartment owner sales prices increased 0.9% in April. grew at an annual rate of over 11%, which is a very serious number.”

A survey published by the company last month found that rental prices rose 11% over the previous year in Jerusalem, Tel Aviv and Rishon LeZion, 12% in Netanya, 10% in Holon and 14% in Petah Tikva. Only in Beersheva, where there is a large supply of apartments for rent, rental prices have remained at the same level as in April 2022.

“We see an upward trend in average rents in the last two months,” the survey said. «Reason: First, we see a reduction in the supply of apartments; secondly, due to the economic situation, potential buyers are putting off buying an apartment and turning to the rental market; Third, a high interest rate environment substitutes money for value, therefore increasing incomes; And finally, political instability creates uncertainty in the housing market as well.

World Nation News Desk
World Nation News Desk
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