Young couples protest housig shortage in Raanana
Photo: Rotem Malenky

Don't call them spoiled

Op-ed: Dream of central Israel home no indulgence; directing young Israelis to periphery populist

Some people associate Shas with political cynicism. They suspect that Shas initiatives regarding housing in the periphery are just an excuse for a political crisis or confrontation.


Shas wants to strengthen its broad social identity, possibly to thwart Aryeh Deri's maneuvers before the next elections. Could be. Politicians practice politics, and the need to do so will not be renounced. What

motivates the Minister of Housing and Construction? It would be more interesting to evaluate whether his proposals will actually help solve the housing crisis in the periphery, or whether they will result in a further price hike, as the Treasury suspects.


Some people accuse Shas of looking out for the ultra-Orthodox. Fine. Apparently this claim is not completely baseless. Minister Ariel Atias says that he looks out for the weaker sectors, and not specifically for the ultra-Orthodox. True. Of course there is a strong correlation between potential Shas voters and those individuals who will benefit when housing restrictions in the periphery are eased. Does that bother me? Not particularly. If these groups deserve governmental assistance, the parties representing them can try to help them.


Now that I'm still alive after stating that I have no complaints against Shas – and by the way, they don't really need certification by the Esteron Rabbinical Court – I want to talk about another segment of the population. It's not a weak sector, it's not in the periphery, and has virtually no ultra-Orthodox. I want to talk about the people who live in the center of the country, between Gedera and Hadera, and in the big cities. And if I may be so bold – even people who live in the upscale suburb of Ramat Aviv Gimmel!


The current government believes that these people get along fine without it. They work and pay taxes, live in comfortable neighborhoods, drive decent cars, and go on vacations. And that's more or less true. To be more precise, it was true; because a major negative change impacted an important factor that determines this sector’s financial balance.


These people were able to help their children purchase their first apartments in close proximity to the homes where they grew up. Yet for the most part, that is over. The dramatic rise in housing prices in coveted areas in central Israel has made this grandiose notion – young couples living a reasonable distance from their parents – an impossible dream. When prices were high yet bearable, they somehow got by. These days, when prices have skyrocketed, even if they take a huge mortgage and their parents access their savings plans, it's not enough. That is the difficult and depressing significance of the middle class’ erosion. And this is how that erosion is transferred to the next generation.


The working middle class is not represented by a minister or party. Populist politicians send young couples from the center of the country to the periphery. They claim that young people from central Israel who insist on finding apartments in the center of the country are “spoiled.” That is a stupid claim. Don't call them spoiled. Dreaming of a house where you grew up is not an indulgence. Living near your place of employment is not an indulgence.


Why is it the government's role to solve this problem? If free market forces created these high prices in coveted central Israel, why does the government have to intervene? That is a worthy claim, but with all due respect, I beg to differ. The particularly high housing prices between Gedera and Hadera were caused by a market failure, on the supply side, as a result of actions and oversights by recent governments. On the demand side, the failure is linked to the Bank of Israel's low interest rates, which allowed for cheap money, until the Bank of Israel governor woke up recently.


This failure, particularly on the supply side, should be fixed by whoever created it or assisted in its creation. Young couples are permitted to want to live near their parents, and not far from their places of employment. And parents who worked their entire lives are allowed to want their children and grandchildren to remain nearby. The state must ensure macro conditions that allow Israelis to realize this dream, and not just the top one percentile.


Remarks by Calcalist publisher Yoel Esteron at the 2011 Real Estate Conference



פרסום ראשון: 05.18.11, 13:26
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