1. The consumer revolution is not coming to an end. From cottage cheese to diapers, from food to housing. Power is beginning to move slowly into the public's hands. We no longer have the "lowly citizen". From now on it's "the strong consumer". Once more Ilan Ben-Dov, taking large amounts of money from the public's pocket and not returning it (let's see him agree to a haircut on the debt of those Orange subscribers who are having a hard time making ends meet) and institutions that only care about licking the cream -- and the revolution will reach the financiers too.
From here, the road to politics is short. No more elections that turn solely on the Arabs and the settlers - the public will also consider economics and consumerism.
2. The current housing protest, in the heart of the big wealth bubble on Rothschild Blvd. in Tel Aviv, can be considered pretty cynical. Except that this explosion occurred after many years of government disregard for the public. The fact is that in Tel Aviv there are numerous universities and colleges, a large supply of jobs, it's great for young people, and the transportation infrastructure does not allow one to live outside, and to work in it. On the other hand, Tel Aviv is very much in demand, and always will be. Therefore, housing prices will remain high. They just shouldn't continue rising at the murderous rate of 15-20% a year.
3. The solution to the housing crisis is clear and known: the moment supply overtakes demand, prices will stabilize, will go down, and stay that way. The moment the close periphery, in other words every place along the narrow strip from Gedera to Hadera, offers an abundance of apartments of various sizes, prices in Tel Aviv will also go down.
The problem is that even if we were to get a government, a prime minister, a minister of housing, and a finance minister dealing only with this issue - it would still take years for supply to become aligned with demand (including young singles, Arabs, Haredim (ultra-orthodox), new immigrants, investors, buyers from overseas). In order to achieve this, not only do we need to have cheap and efficient public transportation, we need to deal with a large minefield: changing the zoning of agricultural land. Since this is an extremely heavy political bomb, we can assume with some certainty that this will not occur in the near future.
4. The current, correct and necessary solution will come about only if rental projects at affordable prices are established in high demand areas. The main issue is doing this correctly. If not, we will suffer for generations. Affordable housing is a nice, socially aware, even populist, term that could potentially be very dangerous.
When we talk about building apartments, even small three-room apartments, intended for young couples, we are in fact talking about the clear transfer of public money to the pockets of the privileged, since some of those who will get affordable housing, if not all of them, are at the beginning of their professional careers, and most likely within 10-20 years will have enough money to purchase apartments for their families.
Selling, as opposed to renting, affordable housing would open us up to enormous corruption, favoritism, and fraud in the government and public sectors, since there is no chance that low-price apartments will be built for every young person, and it is the nature of things that those who are "close to the home", ie. have contacts with bureaucrats and politicians, will get the apartments. And because we are talking about registering these apartments in the Land Registry, there is no way back. The corruption will be complete. In actuality, a class of people will arise who have made their fortunes at the public's expense, including all those people who will remain homeless through old age.
5. Therefore, we need to move forward with affordable housing. And not government building. Not socialized building for the needy. We need proper tenders from the Israel Land Administration which have separate conditions for rental and owned apartments, some of which go for market prices, and some of them for affordable prices. This means that the state will forego, or agree to delay, the fee for each apartment in the project that it usually collects from developers in regular tenders.
The lucky ones who will live in this affordable housing, and again, this refers exclusively to limited-time rentals, will be those who fulfill criteria set by the state, the government and the cities. And everything, but everything, will be with transparency and full public disclosure.
Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2011
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