Price of average home increases despite fall in sales
By Ori Chudy and Shlomit Tzur
August is the most active month in the residential rental market, especially with the new academic year approaching. Added to the pressure this year is the expectation that promised government programs will make buying an apartment cheaper, which is encouraging potential buyers to continue renting and to renew leases.
Rents rose 1.1 percent nationally in the second quarter of 2014 compared with the first quarter and 6.6% compared with the corresponding quarter of 2013, according to Central Bureau of Statistics data.
Since 2007 , rents have risen an average of 64.2% nationwide. In Tel Aviv they increased 85% in seven years from NIS 3,067 per month in the second quarter of 2007 to NIS 5,671 in the second quarter of 2014. In 2007, rents for large apartments (4.5 TO 5 Rooms) in Tel Aviv were the highest in the country at NIS 4,849 per month.Today they are NIS 5,671.
In the Sharon region, average rents have risen 73% since 2007, while rents for large apartments increased 785.
The lowest rents in the second quarter of 2014 were for small apartments (1.5 to 2 rooms) in Haifa and its Bayside suburbs, at NIS 1,654 per month. In 2007 they were also the lowest rents nationwide at NIS 1,250. That is still a 32.3% increase, with a 5.5% annual return on investment for landlords.Renting out an apartment in the North yielded an average return of 5.2%.
Returns on investment for small apartments were 4.5% in Haifa, 4.2% in the central region and 4.75 in the South.
The lowest return for landlords for renting out large apartments in Tel Aviv and in Haifa, at 2.5% in both cities, despite the difference in prices.
The slowdown in the sale of homes continued alongside rising apartment prices in the second quarter of 2014, Government Assessor Tal Alderotti reported Monday. The price of an average 4 room apartment in Israels six largest cities rose 1.6 percent in the second quarter and 6% in the 12 months ending in June.
Average home prices rose most sharply in Ramle (7%) in the second quarter, followed by Eilat (6%), Jerusalem and Modiin (4% each ). Prices rose 1% in Tel Aviv in the second quarter and 9% over the 12 months ending in June..
Prices fell 1% in Holon and 4% in Beersheba in the second quarter. There was no change in prices in Ashkelon, Herzliya, and Kfar Saba in the second quarter.
There was a major slowdown in home sales in the second quarter, mainly of new homes because of the governments plan to charge 0% VAT to new home buyers. However, the low number of deals did not stem rising prices.