|
Getting your Trinity Audio player ready...
|
TEL AVIV – Once Israel’s most sought-after city for housing acquisitions, Tel Aviv’s rental market has struggled to regain momentum since the outbreak of war with Gaza on October 7, 2023.
While rental prices have surged in Jerusalem—rising by as much as 25% over the past year—Tel Aviv’s rental rates have barely increased, and many landlords have been forced to lower their asking prices.
“During the first few months after October 7, the market came to a stop, and rent prices fell,” said Gal Shekel, owner of Shekel Real Estate. “Frequent rocket sirens killed demand, and many young people who had been planning on moving to the city ended up staying at their parents’ homes.”
“The sudden loss of tourism also led many owners to look for long-term renters instead of focusing on vacation rentals, so there were suddenly a lot of new apartments on the market.”
According to the Central Bureau of Statistics (CBS), rental prices in Tel Aviv rose by just 3.9% in 2024, compared to the nationwide average increase of 4.7%.
The city remains Israel’s most expensive rental market, with an average three-room (two-bedroom) apartment costing NIS 6,967 ($1,953) per month, while four-room (three-bedroom) apartments rent for NIS 8,584 ($2,407).
Despite the slow growth in rental prices, Tel Aviv still faces affordability issues. “Only rich people can afford to live in the good areas,” said Shekel. “I can’t even find a place for myself.”
The high price-to-rent ratio—standing at over 47 years of rent to purchase a four-room apartment—has made renting more attractive than buying. Generally, economists suggest that when the ratio surpasses 20 years, renting is the better option, but in many Israeli cities, this figure exceeds 30 years.
Tel Aviv’s rental market has also been affected by the city’s extensive construction projects. Amit Ferenz of MyPlace Realty noted that constant noise from urban renewal initiatives, such as “pinui-binui” and “TAMA 38” projects, has made many apartments less desirable.
“Urban renewal has changed the rules of the game for renters,” he said. “One of the first things people check now is how loud the area is. It has a significant effect on price and desirability.”
The impact is particularly noticeable in areas like Rova 4, surrounding Kikar Hamedina, where large-scale construction has made renting unattractive despite the prime location.
Meanwhile, Tel Aviv’s developing light rail system has yet to influence housing choices significantly, according to Shirley Werner of Remax Ocean Tel Aviv.
“The Red Line has faced technical challenges, and the Purple and Green Lines have been delayed by several years,” she noted. “Once they are fully operational, we expect demand for apartments near the routes to rise.”
Different parts of Tel Aviv cater to distinct demographics. North Tel Aviv remains a prime location for families, while central Tel Aviv is popular among young singles.
South Tel Aviv offers a mixed housing landscape, with trendy areas like Florentin and Neve Zedek contrasting with lower-priced but less desirable neighborhoods such as Neve Shaanan and Hatikva.
With mortgage payments now 30% higher than rental costs, more Israelis are likely to choose renting over buying, leading experts to predict a strengthening rental market in Tel Aviv despite its current challenges.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members