In the recent months I’ve received many calls or inquiries for 3-4 bedroom rental properties in Rehavia, Baka, German Colony, Katamon, etc. Unfortunately the rentals in Jerusalem are few and far between these days. When potential clients call me, I try to explain the situation with the following reasons:
1. Many buildings in the area have been going through either Tama 38 or Pinuy Binuy. Therefore, many options have been removed from the market. To add to that, the people who were living there, need to also look for a rental property until their apartment is ready.
Also, since October 7th, many builders have lost most of their workforce, making a huge delay upon delivery of the properties, so those who were waiting now have to wait even longer and are required to stay in their rental properties for longer, making those properties not available for rent.
2. Since October 7th and the rise of antisemitism, many who bought properties for investment and were renting it out, are now making aliyah and moving to the properties that they own, making more properties less available.
3. Lastly, the index prices have gone up. Those who bought properties for investment and want to get the same ROI need to raise the prices. Therefore, my theory is that you’ll see in one building two similar apartments that have two different rental prices. The reason being that one was bought years ago for a lot cheaper, and therefore doesn’t need to raise the price as much as the property next to it, where the person bought recently for a much higher price and needs to charge a higher price for rent in order to cover his costs and to the ROI.
Due to all these factors, those looking for properties are forced to pay a tremendous increase in what they were expecting to pay. For example, a brand new building on Mekor Chaim St. had a rental property, 2 bedrooms, 2 bathrooms, the price should have been between 7-7,500 NIS per month in a normal market, was just rented for between 8-8,500 NIS per month.
All these factors lead me to believe that if you have the money for the downpayment that will leave you with a mortgage that is less than what you would pay for a rental, then maybe it’s better to buy a property, even if the interest rates are high. At the end of the day you will be owning a property and not shelling out money at a high price for a property that in reality, in a normal market, would not be going for such a price. Food for thought!
