The Naftali Bennett-Yair Lapid-led “change” government consists of such a divergent bunch of coalition partners that it’s sometimes difficult to fathom how they’ll be able to work together.
Since there’s disagreement across the board on far-reaching issues such as Palestinian statehood and the future of settlements, it’s unlikely that this government is going to move ahead in any direction.
But on issues like formulating a state budget or the handling of the worrying rise in cases of COVID-19, the government, based on its initial reaction, seems to be quite equipped to act quickly and efficiently.
Another issue that this government can and must deal with as a top priority that cuts across party lines and affects virtually all constituents is the unwieldy and obscene cost of apartments.
There is probably not a more critical catalyst for young Israelis choosing to leave the country than the inability to afford to buy an apartment. Young families with both parents working are unable to save money, let alone the massive amounts required for a down payment for a mortgage on even a three-room apartment. Finding such an abode outside of the Negev or the Golan for under NIS 1,200,000 ($350,000) is like winning the lottery.
Contrast that to what $350,000 will buy you in the US or Europe, and it’s understandable why Israelis are throwing their hands up and renewing their passports.
Getting the situation under control and in sync with some form of fiscal reality will be an uphill struggle, and the government lacks a clear-cut plan to wage it.
The coalition agreement vaguely states that “the sides agree that we should act with determination to moderate the rise in the price of housing.” That’s quite a low bar which doesn’t even give a nod to attempting to actually lower the prices.
The Central Bureau of Statistics reported last week that average home prices rose by 5.6% over the past year. Speaking recently at the conference of the Israel Builders Association and the Fund for the Encouragement of the Construction Industry in Israel, new Construction and Housing Minister Ze’ev Elkin admitted that prices are going to continue to rise in the short term
“It’s no secret, although the public isn’t feeling it yet, that we are in a renewed bout of the housing crisis. We are on the way to higher prices,” he said. “The headlines we have seen are nothing compared with what is going to happen over the coming year. The appropriate image is the Six Day War versus the Yom Kippur War. The last Israeli government neglected housing, and that will lead to a substantial rise in prices,” he added, naturally blaming his predecessors.
He called for a “higher rate of housing unit planning” – meaning more housing.
That idea was echoed by Tzvi Shapiro, co-founder of First Israel Mortgages, who told The Jerusalem Post’s Zev Stub that the problem is a lack of supply in the housing market.
“The only way to bring down prices is to build more homes,” he said.
Housing starts have dropped each year since 2016, and in the first quarter of 2021, there were just 12,100 building starts, 20% less than a year earlier and the lowest quarterly figure since 2012.
The government has set a target of adding 300,000 units to the home market, while just over 50,000 are currently being approved each year. But even with more housing, the exorbitant prices still make buying an apartment prohibitive for most people.
The regulation that went into effect in 2012 that restricted home owners from borrowing more than 75% of the purchase price as a mortgage may have been necessary as a means to safeguard the economy, but today it is strangling young families. Removing that restriction for sufficient earners would enable them to purchase an apartment, despite the high prices.
There’s no lack of items that grab our lawmakers attention. Bills about family reunification for Palestinians and term limits for prime ministers all have their place. But now is the time to focus on making Israel a functioning country again with a functioning government that works for the people, not to stay in power. People need housing. Let’s make it affordable.