Taub Center: Israel above OECD average for cost of living

Housing, food and automobile prices rose dramatically between 2005 and 2008; housing prices higher than prices in 174 of 175 largest cities in US.

September 6, 2011 02:18
2 minute read.

Home . (photo credit: Alejandra Goldenfen)

Israel’s cost of living exceeds the average in Organization for Economic Co-operation and Development (OECD) countries in housing and the cost of food and automobiles, according to a new report by the TAUB Center for Social Policy Studies.

Overall, the study states that the cost of living in Israel has gone from being 14 percent lower than the OECD average in 2005 to 9% higher than the average in 2008.

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According to the report, average housing prices in Israel are higher than prices in 174 out of the 175 largest cities in America, with only New York City being more expensive. In addition, Israelis pay on average 7.7 years of salary to purchase a home, as opposed to five in England and 2.9 in the United States. Israelis also pay significantly more than residents of OECD countries Australia (6.8 years), New Zealand (5.7), Ireland (3.7), and Canada (3.7), the report states.

The study does not measure housing prices in exact dollar amounts; rather, it takes the average house price and the average monthly salary in each particular country to determine how long it would take an average wage-earner to purchase a house. It also does not take into account other cost of living issues that come into effect when determining the amount of time it would take to purchase a house.

The Jerusalem-based TAUB Center’s report recommends that the high housing prices in Israel be dealt with by not only addressing the symptoms of the issue but in pursuing widespread reforms in the operations of the Israel Lands Authority, which owns some 90% of the land in Israel.

The report also calls for widespread investment in building student dormitories, and for the state to increase taxes on foreign-owned property in Israel, which it says have contributed to the increase in housing prices in recent years.

It’s not only housing prices that are significantly higher in Israel, according to the report. It also states that in 2005 the prices of cheese, milk, and eggs are 6% higher in Israel than the average across the OECD and that by 2008, these staple goods were 44% higher than the OECD average.

Automobiles are also significantly higher, the report finds, with the average price of a car in 2005 being 46% higher in Israel and 70% higher in 2008. These prices, unlike housing prices, were gauged by the report in real dollar amounts.

The Taub Center report also found that the prices of certain goods have risen dramatically, even in just the course of a few years. For instance, while in 2005 food prices in Israel were 16% lower than the OECD average, only three years later, in 2008, they were 16% higher.

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