Chareidi Cities Lead in Home Price Rises

By Shimon B. Lifkin

YERUSHALAYIM – Large apartments in chareidi areas, as well as small apartments in central Israel, are among the most expensive in the country, according to figures released on Thursday by Israel’s Central Bureau of Statistics.

The average price of a home bought in the second quarter of 2022 was 1.88 million shekels, up NIS 340,000 since the first quarter of 2020, and up almost NIS 200,00 from the second quarter of 2021.

Leading the upward trajectory over the past two years were Bnei Brak and Beit Shemesh, along with Beersheva, Netanya, Rehovot, Kfar Saba and Ashdod.

In Tel Aviv and nearby central cities—including Rishon Letzion, Ramat Gan and Bat Yam—the prices of smaller apartments have risen most. In the remaining locations including Haifa, Yerushalayim and Ashkelon, the prices of medium-sized apartments (3-4 rooms) have risen most, according to the CBS.

At the top of the lists were 6-room apartments in Beit Shemesh, which have risen by 66% to NIS 3 million; 1-2 room apartments in Ramat Gan, which have risen by 45% to NIS 1.76 million; 1-3 room apartments in Tel Aviv, which have risen by 43% to NIS 3.07 million and NIS 3.47 million respectively; and five-room apartments in Kfar Saba, which have risen by 44% over the past two years to NIS 3.8 million.

The data seemed to contradict the widely-held view that a shortage of housing is causing the price rises. On that theory, it is hard to explain why Tel Aviv, which leads in terms of the construction of new homes in Israel, has seen prices rise faster over the years than most other large cities, commented Globes.

Moreover, attempts in recent years to reduce demand through lotteries for affordable and pricing-out investors through higher taxes have also failed to dampen the market. Such attempts were made when Moshe Kahlon was Minister of Finance, but prices came down only temporarily.

Globes charged that “government policy has also persistently indirectly harmed the rental market. The state puts renters low down on its list of priorities when it comes to housing policy. Firstly, it builds very few homes for long-term rentals while discouraging investors who want to buy homes and rent them out. The result is that the supply of housing for rent is dwindling.” However, the CBS figures do not support complaints that landlords have been hiking up rents. The CBS found that, excluding public housing, rents rose by 0.7% in July, a relatively modest uptick. This only refers to the 86% of tenant with existing contracts, though. For the 10% who renewed their contracts the rent rose by 3.5% and those who moved saw their rent rise by 7%.