Biggest apartment rent rise in 15 years in 2022

• Published date: 25 January 2023

Hundreds of shekels more on monthly rent

If we take as an example an apartment for which the lease was NIS 5,000 per month, then a renewed lease, after the 2022 increase, would add another NIS 315 to the payment every month. In an apartment for which the lease was NIS 7,500 per month, the increase would translate to about NIS 470 per month in the new contract.

But this is a very rudimentary calculation, which doesn't take into account many relevant factors, which Dr. Yair Duchin Head of the Hebrew University of Jerusalem Real Estate Financing MBA program explains. "You have to remember that the increase reflects a certain average of the increase in renewed leases. In reality, of course, there is a distribution and variation between the apartments, in terms of the quality of the apartment, the size of the apartment, the place where it is located, and more. Usually, the rent increases more when the tenant changes, and increases more moderately when the tenant stays and extends a contract. The connection, familiarity, and a certain degree of kindness - all of these usually cause a more moderate price increase when the contract is renewed."

Influencing inflation and influenced by it

There are even those who claim that the high rise does not reflect the situation in the market. "Rental prices in practice rose by more than 6.3%," insists Zeev Schumacher CEO Schumacher Realty, which specializes in second hand real estate and marketing projects and purchasing groups in Modi'in. "This is only a statistical figure. Market forces have had an impact and the Central Bureau of Statistics only formulates the retroactive situation."

He adds that the rise in rents over the past year was inevitable. "The rise in apartment prices meant that many could not afford to buy a new apartment, and this causes more and more people to stay living in rentals. That is why there is an excess demand for apartments for rent, and when there is high demand, naturally rental prices go up. These are market forces. It also effects the investment apartment market: the purchase cost has become more expensive, and in order to make a profit the landlord must raise the rent."

The Housing Services Index is part of the CPI and thus one of the components contributing to inflation. The Housing Services Index represents 17.5% of the CPI and the overall housing category (actual housing prices are not included in the CPI and are measured separately) represents 25% of the CPI. This creates a situation in...