Lowering the cost of housing in Israel is an imperative

Controlling soaring housing prices

By Haim Shine, ISRAEL HAYOM

Recently, I visited Memphis, Tennessee. The Jewish neighborhood in this city is filled with beautiful, well-kept homes with nice lawns, swimming pools and stylish architecture. Through just a few conversations with homeowners, I learned that a fancy home such as this costs the same as a three-room apartment in Raanana, where I live. The price of a five-room apartment in Raanana is the same as an apartment in Manhattan, the world’s financial capital and one of the most expensive cities in the world.

The price of housing in Israel is unreasonable. The price of apartments makes it difficult for Israelis to buy and makes it difficult for Jews from Western countries to consider immigrating to Israel. There is hardly any building in Israel aimed at rentals and Israelis have to work for many years before they can afford to buy an apartment. The high price of apartments is not just in the central areas which are in higher demand; prices are also high in outlying areas. The price of a small apartment in Kiryat Shmona, in northern Israel, can reach $100,000.

It was the Israeli government itself that created the high price of apartments. Most of the land in the country is regulated by the Israel Land Administration, meaning that most of the land is owned by the state. The state sells the land at the highest price possible. In light of the fact that the number of apartments sold each year is minimal, the prices are made high to bring as much cash as possible into the state’s coffers. The result is that land prices rise, and at the end of the day, it is the citizens who are hurt. The lack of logic and justice in this situation exists because of the state’s land profiteering.

Another reason for the rise in prices is the concentration of building by contractors in certain areas. Because of the fact that prices in the center have skyrocketed, contractors prefer to build in the center, charging high prices for apartments and celebrating their wealth. There is absolutely no motivation for contractors to build affordable apartments in weaker areas, where residents’ ability to pay is limited. The result is a widening social gap between luxury apartments, for those with resources, and a lack of housing for those on a tight budget.

In Raanana and Jerusalem, for example, there is another reason for the rise in housing prices. New immigrants from France and the U.S. bought houses and luxury apartments in those cities at almost unreasonable prices. Wealthy people from those countries bought themselves luxurious shelters in Israel for when they need them. These apartments are shuttered throughout the year, opened only once or twice during the holidays to air them out. There are thousands of these so-called “ghost apartments.” They are not rented out and have a heavy impact on the Israeli housing market.

Last summer’s protests resonated and led to the Israeli government establishing the Trajtenberg Committee. This distinguished committee examined the cost of living in Israel and made recommendations to the government in many areas related to the market and the economy. The Israeli government, in recent months, has begun the process of adopting some of the recommendations. On Sunday, the government is slated to decide on implementing the committee’s recommendations on housing. These are recommendations that no doubt, within a very short period of time, will positively affect the cost of housing in Israel. The government’s decision to sell land to build tens of thousands of new apartments both in high-demand and peripheral areas, including affordable housing for long-term rentals, and the imposition of taxes on uninhabited apartments, will help lean the Israeli housing market back toward the residents of the country and those who hope to immigrate and live in the Promised Land.