While Israeli wage growth has fallen below the OECD average, housing prices have doubled since 2007, these figures show.
By JPOST EDITORIALKulanu leader Moshe Kahlon(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Finance Minister Moshe Kahlon has given top priority to resolving Israel’s housing crisis. The results are thus far mixed, at best, with supply failing to come close to meeting demand and prices skyrocketing out of reach for many.Thirty-percent fewer couples in their 20s have been buying homes in the past decade, according to a recent Reuters report. The longer young families are forced to rent a home, the more distant grows the dream of ever owning an abode, as the bulk of one’s wages are shelled out for living quarters on a monthly basis.The crisis has been worsened by the fact that ever climbing real estate prices, yielding much higher returns than a stagnating stock market, have propelled the more well to do to buy up the limited pool of homes.Recent figures issued by the Organization for Economic Cooperation and Development rank Israel alongside Turkey with the highest housing prices of the 35-member group of developed nations. While Israeli wage growth has fallen below the OECD average, housing prices have doubled since 2007, these figures show.In a report late last year, the Shoresh Institution for Socioeconomic Research estimated housing prices had risen from 2007 through 2015 by 96%, after accounting for inflation.It found that population growth accounted for a small part of the lack of supply, with investor buyers responsible for a large part of the shortfall in inventory.Since the current government took office in mid-2015, Kahlon, to his credit, has cut through some of the red tape to try and resolve the crisis by accelerating the construction process. Apartment buildings have been sprouting like mushrooms in many cities, notably in Afula, in the North, and in Rosh Ha’ayin, near Petah Tikva.The state has also stepped in to try and help cashstrapped wage earners by sponsoring lotteries for many of these units. The locations of such housing makes their prices far more affordable to begin with than in the hubs of Tel Aviv, Haifa and Jerusalem. The lottery system offers many of these homes at a discount under a program known as “The Price of Occupancy” (Mehir Lamishtaken). The savings are around 20% off market value.In an effort to prevent real estate moguls from reaping the benefits, there are rules in place to limit the resale of properties purchased at such discounts.The jury may still be out as to whether these lotteries actually ease the crisis, but questions abound as to whether the system constitutes the best use of state subsidies.Michal Biran, a lawmaker with the Zionist Union, is one of some 14,000 lottery winners this month, out of some 42,000 entrants. She met all the eligibility criteria, as a single woman over 35 who hasn’t owned a home in the past six years. A member of Kahlon’s own Kulanu party also put in a bid, but lost.Why was either of them eligible for the lottery? Should the state be subsidizing housing for someone who as an MK makes more than NIS 41,000 a month, well above the national average, let alone the poverty line? Economists may see some virtue in spending tax revenue to bolster citizens whose earnings are above poverty level. But how many feel public funds are best spent on citizens with much higher than average income? The eligibility rules for the housing lotteries ought to be adjusted just a tad. Providing a discount for citizens who earn to pay a mortgage makes sense.But it is high time for senior officials and other privileged individuals to quit regarding the public coffers as everyone’s private till to dip into at will.Here we see the nation’s disabled protest on a daily basis for a decent monthly stipend. The state makes the ridiculous argument that the monthly NIS 2,342 on offer is enough to live on. Really? The only way to survive on that kind of money is either via a daily visit to the soup kitchen, or alternatively, as a guest in the home of a politician who was lucky enough to win a housing lottery.
Related Tagshouse prices in israelkulanu
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