Foreign homebuyers, go home

Dror Marmor

Jews abroad can afford less, and feel unwanted.

Forget about that rich uncle from the US or France. First of all, he is not as rich as we so love to think. The Ministry of Finance survey today took us back almost 15 years, and this is an excellent opportunity to also mention that in 2003, the shekel-dollar exchange rate was NIS 4.90/$ and the euro exchange rate was over NIS 5.40/€ (a year later, the euro rate neared NIS 6/€). In other words, not only have housing prices more than doubled, but the value of US and European currency has fallen by 20-25%.

For example, in 2003, a Frenchman paid €350,000 for a four-room apartment in Tel Aviv or Jerusalem priced at NIS 2 million at the time. In November 2016, a Frenchman will pay almost €1 milion for the same apartment - nearly three times as much - due to the weaker euro and skyrocketing housing prices.

At the same time, the state is taking away any desire to buy an apartment here. Three years ago, the state canceled the exemption from purchase tax for foreign residents, defining them as purchasers of an additional housing unit, even if it was their first apartment in Israel. Then the purchase tax jumped from 5% to 8% (and even 10% for someone buying a housing unit for NIS 4.9 million or more), which obviously added a lot to the cost, beyond the price of the home itself. Furthermore, the housing cabinet last July approved turning the administrative order doubling the municipal property tax on empty housing units, which was due to expire at the end of the year, into a permanent order. The Tel Aviv, Jerusalem, and Haifa municipalities have already begun implementing the order (with only partial success), meaning several hundred , or even thousands, of shekels a month for people who were thinking about buying an apartment here to stay in on holiday visits.

Increasing taxes on foreigners is not just a matter of money. For years, Jews overseas felt that buying an apartment in Israel linked them to the Zionist vision, and entitled them to a little credit from their brothers in Israel. In recent years, however, it has become clear to them that they are being tagged again and again as being responsible for the crisis in the local housing market.

As if that were not enough, the anti-money laundering authorities in Israel and worldwide no longer permit, certainly not easily, the laundering of dubious funds through real estate purchases - a method that was very popular in former times.

Published by Globes [online], Israel business news - - on November 15, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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