State’s inability to fix the housing crisis leaves many out in the cold

The spike in real estate prices has made millionaires out of homeowners, while renters suffer; solutions exist, but nothing scares politicians more than taxing wealthy voters

קרדיט: dreamstime

The gap between the haves and the have-nots in Israel has grown substantially wider over the past decade, stemming from the fact that for two-thirds of Israeli families, their main asset is their home.

The good news is that since the 2008 real estate slump, the value of these properties has soared some 130 percent — more than anywhere in the West. This is an impressive value hike, certainly for an asset as conservative as homeownership, making real estate investments far more profitable than investing in one’s pension fund.

Climbing housing prices have been especially good for those fortunate enough to own at least two homes, which is about 10% of all households. If one of those homes happens to be in an area that is in high demand, then owners are even better off — even if the majority of real estate equity is still mortgaged.

Climbing housing prices have been especially good for those fortunate enough to own at least two homes, which is about 10% of all households. If one of those homes happens to be in an area that is in high demand, then owners are even better off — even if the majority of real estate equity is still mortgaged.

Much of this capital has been inherited and has naturally made the heirs’ lives more financially secure. But the gaps in housing capital in Israel actually create multi-generational inequality that is expanding at an ever-increasing rate.

This is because the top income decile has accumulated more than NIS 3 million (roughly $852,000) in equity from the apartments they own – 7.5 times more than the lowest-income decile, which accumulated only NIS 400,000 ($114,000) in equity.

“Young people who have an inheritance manage to buy an apartment at an earlier age. They live in a better location and can afford a better education. As they don’t have to spend all their money on housing, they have a better starting point [in life],” Yaron Hoffmann-Dishon explained to Zman Yisrael, the Hebrew sister site of The Times of Israel.

Hoffmann-Dishon is a researcher with the Adva Center, a Tel Aviv-based think tank that monitors social and economic developments. Continue Reading…

From an article by Omer Sharvit, published on the “Times of Israel”, 8 September 2019