Sep 06, 2011 | 0 Comment(s)
Since July, Israelis have periodically taken to the streets to protest surging house prices and rents. The rallies, held in cities like Tel Aviv and Jerusalem, began with a minor protest in a posh Tel Aviv neighbourhood with a handful of demonstrators pitching two dozen tents in the street. Since then the number of participants has grown, culminating with a crowd of more than a quarter of a million outside the Defense Ministry on August 6.
The demonstration was called "Rally for Social Justice", but the ever-increasing property values and rents lie at the heart of the movement. Prices have risen by at least 40% in the last three years -- 13.7% in the 12 months through April-May, three times the inflation rate. For Q1 2011, Israel ranked fourth in the Knight Frank Global House Price Index, behind only Hong Kong, India and Taiwan.
The government owns or manages as much as 93% of land in Israel, part of a national policy established in 1948 to preserve the Jewish state. As a result, most sales are actually long-term leases, and builders have to go through a lot of red tape to obtain construction permits. Low interest rates (making it easier to get housing loans and mortgages) are another reason why demand has always outstripped housing supply in Israel.
Prime Minister Benjamin Netanyahu has pledged to build 50,000 affordable housing units in the next 18 months, and is also offering free land as an incentive to build low-rent apartments. The protesters, however, are demanding that the government lower rents and regulate house prices.
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