Inbal Doron

Many Israeli households live in a rental apartment and struggle to keep up with soaring rental prices.  In 2009, prices shot up in the rental apartment market, as compared to previous years.  So what do renters pay for their apartment in Jerusalem?  In 2009, the average monthly rent for a 2.5-3 room apartment in Jerusalem was 2,900 NIS – 21% higher than the national average for a comparable apartment (2,400 NIS), 70% higher than the average in Haifa (1,700 NIS), and 21% lower than the average in Tel-Aviv (3,500 NIS).  The price gap remains similar across apartment sizes between cities in Israel.  The average rent for a 3.5-4 room apartment in Jerusalem was 3,700 NIS, compared to a national average of 3,200 NIS, and an average of 2,300 NIS in Haifa and 4,900 NIS in Tel-Aviv.

The upsurge in the 2009 rental market was felt throughout Israel, without exception.  Still, Jerusalem saw the largest increase, which reached between 17-21% in 2009 alone, depending on apartment size.  The average increase in Israel as a whole ranged between 15-18%, and the increase in Tel Aviv was 14-18%.  Haifa saw a more modest price hike of 10-13% on average.  These low, two-digit percentage price hikes translate into hundreds of sheqels.  For example, a 3.5-4 room apartment in Jerusalem, which averaged a rent cost of 3,100 NIS in 2008, cost 3,700 NIS per month by 2009.

The price hike in the rental market coincided with the upsurge in the housing market.  These changes have had a negative effect on the number of homeowners in Israel.  According to the Israel Ministry of Construction and Housing, the percentage of homeowners in Israel dropped from 73% in 1995, to a low of 66% in 2008.  This, in turn, has increased the demand for rental apartments and, consequently, rent prices as well.