According to a study commissioned by the Contractors Association in Israel, 80% of young couples in Israel cannot purchase an apartment without assistance from parents.
The data was prepared in advance of the association’s annual convention, which opens in Eilat on Wednesday. The report shows that profits in the construction industry are up due the reality that the buyers are simply willing and able to pay more.
The daily Yisrael HaYom explains young couples cannot afford the average purchase and even one earning 19,000 NIS monthly after taxes cannot dream of such a purchase without parental assistance. The salary listed, 19,000 NIS after taxes is more than double the average national salary according to the Central Bureau of Statistics (CBS).
CBS officials report that only couple listed in the top ranking of earners, pulling in at least 29,000 NIS after taxes monthly may make such a purchase without assistance. One should realize the average monthly wage before taxes is less than 9,000 NIS.
CBS economists predict the real estate market in Israel will increase 6-8% in 2012, making an apartment even less affordable for most Israeli couples.
According to the Global Property Guide however values in Israel dropped 5% in Q1 of 2012. Israel ranks 27th of 44 nations on the list of countries regarding changes in real estate prices – explaining the drop during the first quarter of this year was the result of market uncertainty from a global perspective and not necessarily in Israel. In addition, the steps taken by the government to stabilize the marketplace in Israel also contributed to the Q1 price drop.
What is an undisputable fact is that a growing number of construction projects proudly display the “luxury housing” banner, building with foreign investors in mind. While Jerusalem and other major cities may become a Jewish or frum Disney vacation center for many, or a good investment opportunity to rent and generate income while living abroad until retirement, young couples seeking affordable housing see this dream becoming less and less of a reality as the foreign investors continue jacking up prices,
While this is a welcome trend for developers, builders, realtors, architects and many other industry-related professionals, it is a most unwanted reality for the growing number of homeless frum and not frum young couples in Israel. In essence, they are paying the price for the foreigners who are realizing their dream of owning a home in Eretz Yisrael, a home that in many cases remains vacant most of the year — or alternatively generates income abroad for the home owners, doing little for the local economy.
(YWN – Israel Desk, Jerusalem)
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5 Responses
There are ways around this. Do not allow an apartment to be rented for more than six weeks a year; do not allow an apartment to be owned by a foreigner or someone not living in Israel at least 10 months a year, etc. This is not being done because of the money involved and the need for money among the politicians.
After the six day war I wanted to buy one of the new apartments in the old city, and was told that a foreigner could not buy one. I knew there were people who did, and I asked how they managed to. I was told that they bought them in the name of their children, who were living in Israel, but were living in rental apartments with their young children, who wouldn’t have fit into one of those small two bedroom units. I didn’t want to be dishonest.
1. They should try deregulating the construction industry.
Shortages are a normal result of “socialist” policies.
2. Perhaps tax the more expensive housing.
3. Change their legal and tax system to encourage construction of rental housing.
hmmmm, NO WORK = NO MONEY, obviously the parents must help!
Boohoo, welcome to the real world….. Real Estate like everything else has it’s up and down cycles, and now it’s seeing a high market like it hasn’t seen since the ’80s. I wouldn’t worry too much about the availability and subsequent cost of housing in Israel from all the recent ads trying to market to foreigners. Besides who do you think is pumping millions of investment dollars into the country- the “tourist” or the taxi driver? The Israeli Government would be stupid to restrict the sale of properties to foreigners over what is considered the low to middle class Israeli citizen. I’ve never seen a foreigner get an “Arnona” tax break for a new investment apartment because they “only” make 19,000 shekel. Worse comes to worse they can complain that real estate in America is too expensive and that’s why foreigners are buying.
The solution to this problem is LESS regulation of the real estate market, not more rules as to who can buy and how much they should pay. Fortunately, EY is still largely a free market economy where property rights are respected. Like everything else, individuals need to take responsibility for their own lives and not depend on parents or the state for handouts. If you cannot afford to start a family and buy or rent a home, than wait several years until you save enough to afford it.