Rental Prices Rise Amid Shortage of Large Apartments
The rental market in Israel shows a 4.8% price increase compared to July 2025. The primary driver is a severe shortage of large apartments, with supply dropping by 25% year-over-year, particularly in the southern regions.
The rental market is currently in a state of distress. While the supply of small apartments for rent is increasing, there is a persistent shortage of larger units. This deficit worsens every month, and according to the data, national rental prices remain 4.8% higher compared to July 2025.
The housing market is operating in a pincer movement: apartment purchase prices are slowing down and falling by a few percent, yet rental prices continue to rise. In this environment, tenants are left with only one alternative: buying an apartment. The critical question is where the market is heading: how can rental supply fall and prices rise while housing prices are experiencing a slight slowdown? We observed this pincer movement at certain stages in 2022, when housing prices soared while rental prices fell. Despite the current slowdown, the number of transactions remains relatively high, and contractors continue to sell even during this period.
A significant shift has occurred in housing supply. There is a clear shortage of apartments for rent, which is evident in Israel Land Authority (ILA) tenders and the number of long-term rental housing projects. While Tel Aviv sees new small apartments, there is a lack of units available for long-term lease periods of 10–20 years.
The situation is most severe in Ashkelon, where supply has decreased by nearly 50%. Ashdod, Beersheba, and Rehovot are facing similar challenges. Across Israel, there is a significant shortage of apartments, reflected in a 9.4% decrease in supply compared to last year.
According to WeCheck, the supply of apartments for rent rose by 2.5% compared to June 2026, reaching approximately 16,000 units. However, a distinction must be made: the supply of small apartments jumped by more than 14%, while the supply of large ones plummeted by about 16%. This poses a significant problem for families and suggests that prices for large apartments may continue to rise due to the shrinking supply. Compared to last year's data, the supply of large apartments has shrunk by 25%.
Compared to July 2025, national rental prices are 4.8% higher. For 1–3 room apartments, we see an annual increase of 3.1%, while 4–5 room apartments have seen an annual increase of 4.8%. The most prominent cities in this trend are Jerusalem, Netanya, and Petah Tikva.
