Monday, July 18, 2011
Tent City on Rothschild Boulevard
In contrast, the reasons for the ongoing housing market crisis are complicated and varied. Unsurprisingly, Daphni Leef, 25, a freelance filmmaker who organized the Rothschild tent city demonstration, and others who joined her have been far more adept at initiating a “revolt over rent” than at offering a solution. Many critics have rightly pointed out that the Rothschild Boulevard activists are naïve to think the average young couple will ever be able to afford to live in the heart of Tel Aviv, the most prime real estate location in the country, no matter what the government does. In fact, numerous steps – all of which relatively longterm – have already been adopted by this government to make housing more available and affordable, perhaps not in Tel Aviv where there is no more state-owned land to be re-zoned for apartments, but in outlying areas.
Construction and Housing Minister Ariel Attias has pushed to provide more residential projects in central locations such as Modi’in and Herzliya and has also proposed changing tender laws to encourage building contractors to push down the price of land, which often cost NIS 300,000 to NIS 400,000 per housing unit even before construction begins. Bank of Israel Gov. Stanley Fischer, meanwhile, has taken measures to prevent banks from pouring millions into the financing of investments in housing, particularly now that interest rates are low and mortgages are more affordable.
The government could also discourage foreigners from keeping summer apartments vacant most of the year, by taxing them. Another possibility is to add to the NIS 1.3 billion per year already provided to the needy to subsidize housing. The government might even consider providing special incentives to building contractors to make it profitable to build projects designed for long-term rental. With annual rent for an average three-room apartment at 4 percent of the value of the apartment, it makes no economic sense to invest in rental property, though it does make sense for families to rent instead of buy.
In the final analysis, however, grassroots movements such as the cottage cheese uprising or the Rothschild Boulevard tent city illuminate a much deeper socioeconomic malaise: a growing numbers of Israelis are unable to pay their expenses.