The only justifiable reason for the social protest in Israel is the shortage of housing. All the same, the protesters should know that that dear housing is nothing new here, and housing costs are not currently at a peak, nor have they been recently.
The most accurate way of examining the cost of housing is to calculate how many years of disposable income – that is, income that the consumer is free to decide what to do with it takes to buy a home. The results of such an examination for the period 1961-2010 are very surprising.
The average number of years of disposable income required to buy a home, calculated over the past 50 years, is 14.4, which is very similar to our situation today. To comprehend how bad that situation is, you have to know what it’s like in the Western world. In London, between 1992 and 2008, 3-7 years of disposable income were required to buy a home (for Britain as a whole the average for that period was 2.5-5.5 years).
In Canada, between 1988 and 2010, the average was 2.25-3.25 years. In the US, according to 2009 figures for the 25 largest cities, it took 1.7 years of disposable income to buy a home in Houston, and 9.9 years in San Francisco.
To understand the full significance of the data, you have to remember that it Is normally considered that not more than 25% of disposable income should be devoted to housing. Now, let’s assume a family in which both parents work, and their joint income is one-and-a-half times the average per capita income. If this family spends 25% of its disposable income on housing, it will take it more than 38 years to achieve full ownership of its home. That is a fantastic situation. The peak was in 1997 (not recently, despite rising prices) when it would have taken our family 48 years to acquire full ownership.
Give the tycoons land
As can be gathered from the statistics, the problem is age-old, in terms of the time since the State of Israel was founded. The cause of it lies mainly in the fact that the land is under national ownership, and a large part of it is in the Israel Land Authority’s “safe”. That is to say, a large part of the land does not take part in the free-play of the market, and the supply of land is artificially restricted.
That is why on the desert expanses of Beersheva, for example, ugly tenements were built, just like those in the center of the country. The ILA simply wasn’t prepared to release even desert land for more humane construction. The solution, of course, is privatization, the word the protesters hate most.
Are you frightened that the tycoons will steal the state’s land and assets? Anyone who thinks that control of the economy by a handful of people is something new is simply ignorant of history. The difference is that once upon a time the economic overlords weren’t tycoons, because most of them didn’t own the empires they ruled. But Aharon Dovrat (Clal), Benny Gaon (Koor), Ernst Yefet (Bank Leumi), and the Recanati family (Discount Bank), to mention just a sample, dominated the economy far more than do Tshuva, Ofer and their friends today…Read More>>