Is the mass evacuation of Israel’s northern border zone affecting the rental market in adjacent areas? Our examination of the main northern cities finds that rents there have indeed risen by hundreds of shekels monthly. The Knesset Research and Information Center estimates the number of people evacuated from northern border settlements at 68,500. Some of the families are still staying in hotels, a small proportion has bought homes in other places, but most are renting.
In order to rent homes, the evacuees are taking advantage of government housing aid that began a few months ago, amounting to NIS 200 per day for an adult and NIS 100 per day for a child. A family of five thus receives monthly aid of about NIS 20,000. “Until five months ago, everyone was in hotels. When the government initiated the rent aid, people left the hotels, and this unbalanced the rental market in the Western Galilee,” says Naty Sheinfeld, holder of the Anglo-Saxon agency franchise in Karmiel, Ma’a lot, and Kfar Vradim. “They were dazzled by the large sums, but ignored the fact that the grant is meant to cover all housing expenses, including sustenance, and fixed expenses like local taxes, electricity and water,” he adds.
All the people interviewed for this article found controversial the question how far price rises were explicable by a market responding to a flood of demand, and at what point it was a matter of exploiting the distress of the evacuees. It should be stressed, however, that the evacuees’ ability to absorb rising prices lies in government aid that is not available to regular renters. At some point in the future, the aid will come to an end, and that will presumably contribute to some degree of moderation in housing costs.
Revival in rural areas
“The aid dazzled people, and the first who jumped on the bandwagon were spendthrift and acted inadvisedly,” says Sheinfeld. “Most of the evacuees in the Western Galilee are residents of rural settlements who were looking for similar houses, that is, houses with land. And then, all of a sudden, rents for houses with land in the Western Galilee shot up from NIS 6,000-6,500 a month to NIS 8,000-8,500. That sent the whole market into shock, including us real estate people. The rumor that rents were rising reached owners of apartments in multi-occupancy buildings as well, who saw that they were on to a good thing, and started raising prices.”
But then it emerged that not all the tenants were evacuees, and the market wasn’t able to pay these prices, Sheinfeld says. “Prices gradually fell to a level that may have been high in comparison to the period before the war, but that was substantially lower than the peak levels set in the first months of the distribution of the grant. Today, rents for these houses with land are of the order of NIS 7,000 monthly,” he says.
The sudden demand that hit the northern rental market reached the urban market as well. “We are clearly seeing a revival in settlements that are not on the border fence,” says Michal Korland, franchisee and partner in Re/Max Pioneers in the north. “In other settlements there is a significant rise in the number of deals, for home purchases, but mainly for rentals.” Korland says that in the past few tense weeks, as an attack by Hezbollah was awaited, the market subsided somewhat. “But in the last couple of days it has gone back to working as it was before.”
Sheinfeld and Korland say that the evacuees try to rent in places close to their homes. For example, kibbutz and moshav members who have been evacuated rent houses with land in Kfar Vradim, a settlement not far from the border but not right on the fence. People evacuated from Shlomi rent in Nahariya.
“Prices are rising because the market is rising, but we are not seeing greed and an attempt to exploit the situation on the part of landlords,” says Korland. “Most of the landlords understand the situation, understand the needs of the evacuees, and some agree to allow the required flexibility in these rental agreements. They too are in a situation of uncertainty about the future, because the war will end and the evacuees will return to their homes, and many homes will be left empty.”
Korland says that some evacuees rent apartments in Nahariya that were sold under the “Buyer Price” government subsidized scheme to young couples who bought them for investment but struggled to rent them out because of the excess supply created. Rents in Nahariya are currently NIS 3,900-4,200 for three-room apartments and NIS 4,500-4,800 for four-room apartments. Korland estimates that prices have risen by 7-10% since the war began.
Rents up 20%
Most of the evacuees from the Galilee panhandle and the Western Galilee are apparently concentrated in Tiberias. Data from the yad2 website sent to us specially show that rents for three-room apartments in Tiberias have shot up by 17% in comparison with the period before the war, and rents for four-room apartments have risen by 7%. “I actually estimate that rents have risen by at least 20% since the war started,” says Zvi Seroussi of Zvi Realtors. “Apartments rented in the past for NIS 4,000 are now rented for NIS 5,000, and apartments that used to cost NIS 3,000 now cost nearly NIS 4,000.” Seroussi says that part of the rise can be explained by the short-term leases that the evacuees sign, but part is due to landlords exploiting the evacuees’ plight.
In Afula too, rents are on the rise, mainly for furnished apartments, “and unfortunately there are landlords who are taking advantage of the situation,” says realtor Maor Shem Tov. “Evacuated families mostly prefer to rent large apartments in the new neighborhoods, the Yizre’el Quarter and Lev Ha’emek. A four-room apartments rented in the past for NIS 3,500 now costs NIS 4,000, and a five-room apartment that was rented for NIS 4,000 is rented for NIS 4,500-4,800.”
To put matters into proportion, the Central Bureau of Statistics survey of the rental market in Israel found that average rents have risen by 3.5% since the war started. The Housing Services Index, which is based on changes in rents, has risen by 2% in this period, such that the figures from the north, especially from Tiberias, are exceptional.