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More Israeli households are expected to prefer renting a home rather than buying their own apartment and the consequences will be negative, Meitav investment house chief economist Alex Zabezhinsky predicts.
In his weekly survey of the Israeli economy, Zabeshinsky wrote, “Since 2021, only households in the top three income deciles can meet banks’ conditions for an average mortgage repayment, compared to five deciles until three years ago.” Until 2021, the average repayment on an average mortgage was generally lower than the average rent. However, at the end of 2024, the average mortgage return was higher than the average rent by about NIS 1,500, or 30%”
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In Meitav’s assessment, this means more pressure on the rental market. “As long as the economy is growing and at full employment, demand for rented apartments is expected to be strong and support a relatively high increase in the housing section of the price index,” Zabeshinsky wrote. The weight of the housing section in the Consumer Price Index, which mainly reflects changes in rent, has recently jumped and constitutes about 27% of the index. In other words, any increase in rents directly affects inflation and pushes up the index
Meitav concludes by saying, “In our assessment, it is precisely the prices of apartments that may fall. The risk in the residential real estate market constitutes one of the threats to growth in the economy.”
Published by Globes, Israel business news – en.globes.co.il – on February 16, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
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