What makes this summer different from all others? War. Not only against our many enemies outside the borders but also within our cities over rental apartments. It's simply crazy. There are increases of tens or even hundreds of percent in major cities in the center, Ha'Shfela area and even in the South. Unfortunately, no one wants to live in the North anymore.
The reasons for this spike are well-known and unsurprising. The war, which began on October 7, 2023, led to the evacuation of hundreds of thousands of Israelis from their homes, especially in areas close to the front lines in the north and south—some by the state, some left independently, to save their lives and those of their children.
Many of them, especially northern residents, are still looking for new housing solutions, where a fortified room has become a cardinal condition for renting. This situation creates pressure on the market, as families who suffered from the security situation seek apartments in safe areas that do not experience frequent sirens.
Meanwhile, this situation is unfolding against the backdrop of additional economic factors like high-interest rates and rising inflation, causing construction starts to stall and further shrink the already limited supply of apartments. Tests conducted by the Madlan website show surprising data: in cities like Modiin, Ashkelon, and Netanya, significant increases in rental demand have been recorded in recent months, while major and expensive cities like Tel Aviv and Givatayim are experiencing a relative slowdown in demand.
And still, it is a relative slowdown, as there is still a rise of tens of percent in demand compared to the same period last year. Of course, the market is not only dealing with the effects of the war but also with economic and entrepreneurial influences that could soon change its face. Dealing with these phenomena requires an appropriate approach from the authorities and developers to meet the emerging needs in the rental market and help distressed families find their new homes.
"The impact of evacuees from the North and South on the rental market is dramatic. Thousands of families who had to leave their homes initially found themselves in hotels, and now, as the school year approaches, they are starting to look for permanent solutions," explains Tal Kopel, CEO of Madlan.
"The evacuees are looking for cities that are not only safe but also offer relatively new apartments with adequate protection. They are unwilling to compromise on quality of life and protection level, so their apartment search is focused on cities with a high supply of new and high-quality apartments," he said, explaining the background for the dramatic increases in demand compared to the same period last year, as presented in the survey.
With the help of Madlan, we have prepared for you the ranking of the most sought-after Israeli cities in the summer 2024 rental market. If you're renting an apartment, don't forget to wear deodorant because, for sure, you will be sweating.
Most in-demand: Modi'in - a surge of almost 400%
According to Madlan website data, summer 2024 is characterized by a dramatic rise in demand for rentals in the city of Modi'in Maccabim-Re'ut, with an incredible jump of about 392% in demand rates compared to the same period last year. The current situation in the rental market in the city reflects the impact of the war, which led to the relocation of many families from different parts of the country, and the average price of a 4-room apartment in the city is now about 6,500 NIS.
Ze'ev Schumacher, CEO of Schumacher Real Estate, notes that since the outbreak of the war, Modi'in has absorbed evacuees from the northern and southern regions, including families, young people, and elderly people, which contributed to a significant rise in the rental market. He emphasizes that although the demand in this season may seem normal, the supply of rental apartments is almost nonexistent, leading to a rise of about 15% in rental prices in the last four months alone.
For example, in the Morasha neighborhood, which is considered one of Modi'in's new and established ones, 3-room apartments are now rented at a price of NIS 6,000 per month, compared to a price of NIS 4,800 per month just four months ago. Likewise, 4-room apartments, which were renting for about NIS 6,200 per month, now cost about NIS 7,000.
Second place: Jerusalem - a surge of approximately 180%
Among the cities that have experienced relatively fewer alarms since October 7, Jerusalem stands out in particular, and this is reflected in an impressive rise of 180% in rental demand in the capital city compared to last summer. This is while the average rent for a 4-room apartment currently stands at 9,486 NIS. Amazing.
The relative calm in the city, compared to others that were more affected by the security situation, allows residents and evacuees to find refuge and security in it. This trend is reflected in the relocation of evacuees to hotels in the city and then in the search for rental apartments, adding another layer of demand to the local rental market.
The high demand for rentals in Jerusalem is an ongoing phenomenon, stemming from the city's various characteristics, such as its rich history, diverse culture, and proximity to the country's leading government and educational institutions. However, the increased demand following the war creates additional pressure on the market, leading to a rise in rental prices.
Third place: Beersheba and Ashkelon - a surprising surge of almost 130%
Southern cities also experience a significant and surprising rise in demand from renters, as explained by Alexander Ostrovski, CEO of EXP Israel, which operates mainly in Beersheba and Ashkelon. However, despite the relatively equal jump in demand in these cities, standing at about 128% compared to the same period last year, there are significant differences in the nature and needs of the renters between the two cities.
According to Madlan website data, in the Negev capital of Beersheba, the average price for a 4-room apartment stands at about NIS 3,500 per month. Ostrovski emphasizes that the rental market in the city was not significantly affected by the war, and tthis summer brings about the rehabilitation of the student-dominated neighborhoods, like G and D, which were in a vacuum during the first half of the war due to the halt of academic studies.
In contrast, Ashkelon, where the average monthly price for a 4-room apartment stands at about NIS 4,000, was significantly affected by the security situation, with hundreds of alarms heard in the first months of the war, causing many residents to leave the city, some with government support and others independently. However, Ostrovski notes that "after Passover, when the security situation stabilized, people began to return. Rental prices in the city returned to pre-war levels."
One of the significant changes currently observed in Ashkelon is that families with children, and anyone who can afford it financially, are no longer willing to compromise on an apartment without a fortified room. The reasons are clear: the demand for protection has become necessary for many families, forcing the market to adapt accordingly.
Fourth place: Netanya - an increase of approximately 63%
Since October 7 until today, Netanya has enjoyed relative quiet, almost without alarms, making it a very attractive option for evacuees and in general. Nevertheless, the rise in rental demand in the city was moderate compared to the rest of the country, with an increase of about 63% in demand compared to summer 2023, according to Madlan website data. Still, it should be noted that rental demand in Netanya was (and remains) relatively high even during quieter periods.
The average monthly price for renting a 4-room apartment in Netanya is about NIS 6,930, indicating that the city manages to maintain its status as one of the most sought-after ones in the Israeli rental market. Netanya offers a wide variety of options for renters, ranging from popular family neighborhoods like Kiryat Hasharon to luxury villas in Ramat Poleg and ultra-luxury towers overlooking the sea in Ir Yamim.
Additionally, Netanya is also considered a favorite of immigrants from France, and the demand there may increase even more as antisemitism levels in Europe rise. For immigrants, the city offers a comfortable and familiar environment, allowing them to rebuild their lives in Israel.
Fifth place: Haifa - an increase of almost 50%
The northernmost representative in the ranking is the city of Haifa, with a rise of about 46% in rental demand compared to the same period last year. According to Madlan, the average rent for a 4-room apartment in Haifa currently stands at about 4,960 NIS.
Although Haifa was seen as a potential city to attract many evacuees from the North, due to its location between the North and center and, of course, its attractive beaches, the actual fear of war on the northern border led to a relatively moderate rise in rental demand in the city. It seems that many evacuees and young couples with children prefer to wait and see how the situation develops before making decisions about moving to the city.
Sixth place: Tel Aviv - an increase of 42%
Tel Aviv, Israel's rental capital, presents a somewhat complex picture in the current rental market. According to data from the Madlan website, the average monthly rent for a 4-room apartment in the city is the highest in Israel, standing at approximately NIS 12,730. Compared to the summer of 2023, there has been an increase of only 42% in rental demand in the city. Despite the significant rise, there are several reasons why Tel Aviv, a city accustomed to leading in every possible metric, does not top the rental demand chart for the summer of 2024.
Firstly, the high price serves as a substantial barrier. Many potential renters are seeking more affordable options in other cities where they can get more value for their money.
Additionally, the city was hit by several rockets during the war, which caused concern among young couples with children and potential renters. These feelings are compounded by the fact that many of the rental apartments in Tel Aviv are old and not fortified, giving renters a sense of insecurity.
Tel Aviv continues to be a central and attractive city, but the gaps in prices and personal security are affecting rental demand in the city. Renters are looking for housing solutions that meet their needs, and the current rental market situation in Tel Aviv reflects this complex dynamic.
Seventh place: Hadera - a 21% increase
According to data from the Madlan website, Hadera has seen a 21% increase in rental demand compared to the same period last year, with the average monthly rent for a 4-room apartment standing at approximately NIS 4,830.
According to real estate consultant Kinar Fartush, "Before the war, there was a slight decrease in rental demand in the city. However, the outbreak of the war highlighted the fact that the Hadera area is considered one of the safest in the country, with not even a single siren sounding in the city, leading to an increase in rental demand due to the arrival of many evacuees looking for housing in the city.
"The growing demand, combined with the shortage of apartments in the city as in the rest of the country, is causing rental prices in Hadera to continue to rise."
Eighth place: Ramat Hasharon - a 7% increase
According to data from the Madlan website, Ramat Hasharon has seen a 7% increase in rental demand, with the average rent for a 4-room apartment standing at NIS 9,670 per month.
Meir Gluzberg, owner of Real Capital, notes that the security situation has changed the nature of the rental market in the city, with protection against rockets and security aspects becoming crucial factors for renters.
"Looking for an apartment today is not just a matter of location or price, but also elements like a reinforced security room, a shared shelter in the building, and even security at the building entrance, all of which contribute to a sense of personal security," he said. "The market is increasingly focused on the security needs of tenants, which affects their preferences and requirements."
Additionally, there is also an increase in demand from renters evacuated from the North and South, although this is less noticeable in the luxury market in Ramat Hasharon. There are also apartments becoming available due to the return of reservists and others who have had to relocate due to the war.
The biggest decline in the center: Givatayim, a 24% decrease in demand
According to the Madlan website, the biggest drop in the central region is in Tel Aviv's smaller neighbor, Givatayim, with a decrease of approximately 24% in rental demand in the city. This is while the average rent for a 4-room apartment in the city is about a quarter less than in Tel Aviv, standing at approximately NIS 8,150 per month.
Liron Tzur from Wonderland Real Estate in Givatayim notes that only in February 2024, about four months after the start of the war, did the rental market in Givatayim begin to show signs of recovery.
"At the start of the war, the demand was almost entirely for apartments with a reinforced security room (Mamad), mainly from families already living in the city," Tzur said. "As the months passed, renters' preferences changed, and now new renters are not necessarily looking only for apartments with a Mamad but are willing to settle for apartments that have a nearby shelter, indicating a shift in renters' approach and needs due to the situation."