Wednesday, January 26, 2011

Building permit in Israel takes three times as long...

The OECD included Israel in a housing market report for the first time since its accession. The "Housing and the Economy: Policies for Renovation" report includes Israel in its list of countries where home prices were stable or declined between 1980 and 2008 (the last year for data for this table), but in other aspects of housing policies, including regulations on land use, construction, and rent, Israel's record is not outstanding, to put it mildly.

Israel's response (building starts) to higher demand for housing and higher prices is among the lowest in the OECD. The US tops the charts on this factor; Israel is ranked 15th. The report says that a government's response, or lack thereof, to the housing shortage is in direct correlation to the shortage of land and land use regulations. In two studies, Israel was near the bottom of the table. In Israel, a building permit takes almost 150 days to obtain. In comparison, building permits take less than 50 days to obtain in the US, Canada, Finland, and other countries.

Israel is second to last in terms of regulations on the rental market. Rent control is tightest in Sweden; only Finland is laxer than Israel. In the tenant-landlord regulations table, only the US is laxer than Israel. Sweden has the tightest regulations in that section as well. The report is a chapter in the upcoming OECD "Economic Policy Reforms: Going for Growth 2011" report. Some of the housing report's conclusions are especially relevant to the contemporary Israeli housing market. They include improving the responsiveness of building starts to market demand, reviewing building licensing procedures, which restrict housing starts, and reviewing land use regulations, which block development.

Source Globes

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