The median price figures for Israeli apartments, released by the Ministry of Housing yesterday, reveal an even gloomier picture of the housing market than homebuyers imagined. If the median prices for new and second-hand apartments are divided by the median wage, it emerges that an Israeli has to part with 207 monthly salaries to buy a new apartment, and 150 salaries to buy a second-hand apartment.
Yesterday, the Ministry of Housing published median prices for 3-5 room apartments, by location. Median prices provide a more accurate picture of apartment prices because they neutralize "noise" such as luxury homes that pull mean prices higher. Use of the mean salary for the number of salaries required to buy a home statistic is also distorting, because of senior management salaries. In fact, in the past four years, the mean salary has been about 74% of the average salary.
In other words, according to the median figures, if an Israeli were to apply his entire salary to the cost of buying a home (which of course does not happen in reality), he would have to work for over 17 years to buy a new home, and 12.5 years to buy a second-hand home.
These figures relate to home prices nationally. In high-demand areas, median prices are much higher, even in comparison with mean prices. It could be however that the median salary is also higher in the center of the country, but there are no published statistics on this.
In fact, the Central Bureau of Statistics does not publish the national median salary figure. The statistic was produced for "Globes" by Prof. Eran Yashiv, associate professor of economics at the Eitan Berglas School of Economics and chairman of the Public Policy Department at Tel Aviv University, chairman of the Economic Policy Program at the Taub Center for Social Policy Studies, and one of Israel's senior labor market economists.
Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2013
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