Buying a home in Israel is no more difficult now than it was at the end of the 1990s, according to a study by the Taub Center for Social Policy Studies in Israel. This surprising finding is based on a comparison of home prices with household disposable income, which is a more accurate measure than the customary statistic based on home prices and salaries.
Taub researcher Kyrill Shraberman explains that the measure of the number of salaries needed to buy a home has several disadvantages, because income from work is not a household's only source of income, and furthermore many households have more than one wage earner, and the disposable income of many households has therefore managed to keep pace with the rate of growth of per capita GDP.
A comparison with the other OECD countries shows that while the difficulty in buying a home in Israel is a little lower than it was between 1995 and 1997, and similar to what it was between 1998 and 2000, in most OECD countries the ability to buy a home in 2017 was lower than it was in 1995, because of the bubble in the mid-2000s, and renewed price rises recently. The ratio between home prices and disposable income has risen in those countries.
The real problem in Israel is not that buying a home is more difficult now than at any time in the state's history, as some believe, but that the ratio between home prices and disposable income in Israel fell substantially from 2000 to the middle of the last decade, and then jumped starting in 2008.
The Taub Center study finds that there are substantial variations in the ability to buy a home according to a household's characteristics. For example, when the head of the household is aged 35-54, its disposable income has risen by less than the average, whereas when the head of the household is aged 25-34, the rise in disposable income is in line with the average.
Location also plays a part. In Tel Aviv, the Dan region and Jerusalem, the ability to buy a home has declined since 2004 by more than the national average, whereas in the north and the Sharon region the decline is less than the national average. In Haifa, the ability to buy a home is similar to what it was in 2004.
Published by Globes, Israel business news - en.globes.co.il - on December 31, 2018
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