Tel Aviv apartment rents falling

• Published date: 07 April 2024
• Author: Anat Daniely Lev and Bar Lavi
• Publication title: Globes (Rishon LeZion, Israel)

Yad2 CMO Ayelet Nitsan explains that the war and the market situation have led to apartments rented to tourists on Airbnb being released onto the general rental market and influencing the fall in rents

She says, "The trend in falling rents in Tel Aviv was seen mainly in the last quarter of the year. The war and the economic situation in the market led to a decrease in activity in the rental market and tenants who did not have to move apartments did not do so. Many young people who were called up into the reserves left their rented apartments. Postponement of the start of the academic school year delayed new demand from students. In addition, a significant decrease in tourism from abroad released a large number of Airbnb apartments onto the market, which increased supply in the city. All of these led to an increase in supply at the same time."

Both Yad2 and WeCheck (presented later) survey rents on offer. In contrast, the Central Bureau of Statistics surveys the actual rents appearing in contracts that are signed each quarter. The most recent figures were published on March 15, reflecting rents in the final quarter of 2023. These figures actually showed a rise of 1.47% for 3.5-4 room apartments to NIS 8,072 per month. In 2023 the average rent in Tel Aviv for 3.5-4 room apartments rose 8.14% to NIS 8,072 from NIS 7,464 in 2022.

Falls in the highest demand neighborhoods

In order to understand how significant the decrease is in the city's neighborhoods most sought-after by young people, a segmentation by neighborhoods was undertaken by "Globes" for WeCheck, which provides a variety of tech-based financial solutions. The data show falls in the highest demand areas of Tel Aviv, in the city center and in the Old North.

For example, in District 3, the Old North, 3-4 room apartments were rented in February 2024 at monthly rents of NIS 7,916, a 17.9% decrease in the district in just one year. This is a significant figure since the district is a leader in urban renewal and there are many tenants whose apartments were demolished for reconstruction and are looking for alternative housing. Slighter decreases were recorded in District 1, where rents fell 8.6% in the past year.

WeCheck CEO Rami Ronen says that the slowdown in the housing market combined with higher interest rates has impacted the rental market. "2023 was a complicated year for the Israeli economy. The hike in the Bank of Israel's interest rate, the cost of living rise and the slowdown in the real estate...