Israeli Politicians' Housing Price Promises Face Economic Reality

As elections approach, Israeli politicians are making widespread promises to young couples and the general public, vowing to significantly lower housing prices immediately after being elected. Slogans include pledges to reduce prices by tens of percent, lower the average apartment price from 170 to 120 average salaries, offer mortgages up to 90% of the price over 40 years, and build 100,000 long-term rental units at a 30% discount. Candidates are also promising discounted land, subsidized mortgages, and grants for reservists.

However, the article questions the sincerity and feasibility of these promises, suggesting that a drastic drop in housing prices could be economically devastating for Israel. Such a decline could severely impact state revenues from land sales and property taxes, lead to the collapse of contractors and construction companies burdened by high-interest loans and unsold inventory, endanger commercial banks with billions in loans to developers, cause the cancellation of tens of thousands of apartment sales, and undermine the financial security of existing homeowners whose property values would decrease.

The Ministry of Finance views the housing market not just as shelter but as a significant revenue generator. While publicly campaigning against the high cost of living, the government has a vested interest in maintaining high housing prices to continue collecting taxes and land sale revenues, and to avoid destabilizing banks, contractors, and the broader economy.

The Israeli real estate market is described as a large aircraft carrier, slow to react to fluctuations. Underlying issues such as a severe shortage of available land in high-demand areas, cumbersome bureaucracy delaying permits for years, outdated construction methods requiring foreign labor, and a lack of adequate public transportation infrastructure are seen as more powerful than any election campaign promises.

Consequently, a generation is drifting away from the dream of homeownership. While in the past, average salaries allowed for home purchases, today's exorbitant prices and high interest rates are creating a new reality where many young working individuals are becoming a "permanent renting generation," destined to spend their lives paying rent without a realistic chance of owning a home. Homeownership has become a privilege for the wealthy or inheritors.

The article concludes that without a government willing to undertake deep reforms, address narrow interests, develop mass transit to connect the periphery, and truly remove construction barriers, the cycle of empty promises during elections and high costs for ordinary citizens will continue.