Finance Minister Moshe Kahlon.
(photo credit: MARC ISRAEL SELLEM)
Rental prices increased more than five times faster than salaries since 2009, according to a Knesset Research and Information study presented at an Economic Affairs Committee meeting on home prices Tuesday.
The ratio of rent to salary, a common measure of affordability, rose some 30.8 percent in the same period, the study found.
Rent price increases have coincided with the booming cost of housing, which the study said rose 71.7% in real terms from mid-2007 until 2015.
Finance Minister Moshe Kahlon said the government is to blame for the housing crisis that has seen housing prices double in less than a decade, but an end seemed to be in sight.
“The ones who brought about this housing market is the state of Israel itself,” he told the committee, noting that the state controls more than 90% of the nation’s land. “Through unbelievable profiteering on its own lands, the state raised the price of land tens of percentage points.”
New policies, he said, forewent billions in state revenue for the benefit of the future of young couples. In particular, he touted his “Price for the Homeowner” program that offers subsidized mortgages and discounted apartments for eligible people. Kahlon said 70,000 new housing units were in the works to boost supply.
Data released by the Construction Ministry on Monday may be cause for hope among potential homeowners. It showed new apartment prices falling 6% in the third quarter, and second-hand apartment prices falling 4%. The figures are not the ones that make up the official statistics, however.
Guy Yehuda, senior economist for research and strategy at Psagot Investments, said that the dampening demand and increase in housing starts may have an effect but it was too soon to tell.
“It’s still too early to draw conclusions,” he said, pointing to a flurry of policy changes that could “cloud” the data.
Trends could be temporary.The Knesset study showed that between May 2012 and September 2014, home prices actually fell somewhat (1.2%) relative to other prices in the economy, but the trend did not last. Prices since rose 6.8% in real terms
“We’ll have to wait several more months to obtain cleaner data and get a clearer picture,” Yehuda said. That said, he continued, several data sources were pointing in the right direction, and there was cause for optimism.
In the committee meeting, opposition MKs called for a fuller effort.
Zionist Union MK Manuel Trajtenberg said he welcomed Kahlon’s initiatives, but that they were not enough.
“What we need is a real affordable housing program. What you’re doing is not the accepted model in the world,” he said.
Demographic trends, he added, indicated that housing supply would continue to fall short.
MK Stav Shaffir, also of the Zionist Union, urged passage of a law to rein in rent prices.