Tel Aviv and Jerusalem, are now going through what is known as the Manhattan phenomenon

As more and more foreigners snap up prime real estate across the country, pushing the purchase prices of apartments out of the reach of many, an increasing number of young Israelis are finding they're also being priced out of the rental market. "Israel's big cities, mainly Tel Aviv and Jerusalem, are now going through what is known as the Manhattan phenomenon," said Bernard Raskin, regional director of the real estate company Remax-Israel. "The demand for apartments in Tel Aviv is not new, but what is new are the prices that people are now asking for small one and two bedrooms. I have never seen a market like this before."