Just the Facts: Brother, Can you spare me an apartment?

Prices for rented apartments have skyrocketed recently as the number of homeowners has shrunk.

Apartment pricing graph 521 (photo credit: Jerusalem Institute for Israel Studies)
Apartment pricing graph 521
(photo credit: Jerusalem Institute for Israel Studies)
Many Israeli households live in rented apartments and struggle to keep up with soaring rental prices. So what do renters pay for their apartment in Jerusalem? In 2009, the average monthly rent for a 2.5- to three-room apartment in Jerusalem was NIS 2,900 – 21 percent higher than the national average for a comparable apartment (NIS 2,400), 70% higher than the average in Haifa (NIS 1,700), and 21% lower than the average in Tel Aviv (NIS 3,500). The price gap remains similar across apartment sizes between cities in Israel. The average rent for a 3.5- to four-room apartment in Jerusalem was NIS 3,700, compared to a national average of NIS 3,200, and an average of NIS 2,300 in Haifa and NIS 4,900 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% and 21% in 2009 alone, depending on apartment size. The average increase in Israel as a whole ranged between 15% and 18%, and the increase in Tel Aviv was 14% and 18%. Haifa saw a more modest price hike of 10% to 13% on average. These low, two-digit percentage price hikes translate into hundreds of shekels. For example, a 3.5- to four-room apartment in Jerusalem, which averaged a rent of NIS 3,100 in 2008, cost NIS 3,700 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 Construction and Housing Ministry, 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.