It certainly doesn’t look like a ghost town from the statistics.
Last year Jerusalem saw construction starts on 3,660 homes, even more than Tel Aviv’s 2,100 or so. The number for Jerusalem marked a 48% increase over 2013.
Meanwhile, prices are climbing sharply in the capital, too. A home of 3.5 or four rooms there — Israel’s largest city — sold for an average 1.83 million shekels ($480,000) last year. That represents a 79% increase over a decade.
Moreover, Jerusalem is growing faster than Israel’s other two big cities. The population climbed 1.8% to 829,000 last year, compared with growth of just 1% for Tel Aviv and 0.4% for Haifa.
Jerusalem saw more businesses open last year than close, giving it a net addition of 750, up from 300 in 2013. By comparison, Tel Aviv and Haifa saw this number decline in 2014.
But even as Israel celebrates Jerusalem Day on Sunday, Jewish Jerusalemites are fleeing and the people buying and building homes are disproportionately foreign residents — albeit nearly all Diaspora Jews — buying a second home to use a few weeks of the year.
Mayor Nir Barkat has told TheMarker that about 11,200 homes in the city are owned by foreigners — and he wants that number reduced.
Last year, a stunning 11% of all homes in the capital were bought by foreign residents, versus 8.5% in Tel Aviv and 8.7% in Netanya, two other cities favored by overseas Jews. Nationwide the figure was just 4%. Jerusalem accounted for 28% of all home purchases by foreign residents in Israel.
Four years ago, as the social-justice protests were bringing attention to the high cost of housing, Barkat strove to address the problem by doubling arnona (city tax) on so-called ghost apartments unoccupied most of the year.
“The proposal was supposed to perhaps encourage some of these foreign homeowners to come and live in their Jerusalem apartments, or at least to rent them or use them for some other purpose,” Barkat says.
“If not, the arnona money that the city gets would be used to encourage building or renting by young people. Unfortunately, the idea was approved in principle by the government but never implemented.”
Meanwhile, the capital’s high housing prices are discouraging Jerusalemites from staying put. Last year, first-time home buyers accounted for 27.8% of home purchases in Jerusalem, more than six percentage points below the national average, though higher than for other high-priced cities like Tel Aviv (26.2%) and Ramat Hasharon (25.6%).
Worse still, in 2013, the last year for which figures are available, 17,900 people left the capital and only 10,500 moved in, continuing a trend that has lasted many years.
If Jerusalem’s population is growing, it’s mainly due to the Palestinian eastern half of the city. “The growth rate of the Jerusalem Arab population is higher than for the Jewish population, which has been in decline for the last two decades,” the Jerusalem Institute for Israel Studies says in a report.
Yair Assaf-Shapira, a researcher at the Jerusalem Institute, says net emigration from the city is not all bad news. Many of the emigres relocate in the nearby area stretching from Beit Shemesh and Modi’in in the west to the settlements of Ma’aleh Adumim and the Etzion Bloc in the east and south. Assaf-Shapira calls this area “metropolitan Jerusalem.”
“There’s a critical difference between those who leave for the metropolitan Jerusalem area and those who leave the area altogether. The former keep their connection to the city; the latter for the most part cut themselves off,” Assaf-Shapira says.
“Metropolitan residents maintain their link to the city in many areas — first and foremost employment; after that education, culture, shopping and services. This is important to the city. Workplaces add value, some of which comes back to the city directly — for example as municipal tax — and some indirectly — like salaries paid to city residents or via services by city-based companies to the employer.”
The institute estimates that 49% of defectors from the city in 2013 — some 8,800 people — relocated somewhere inside the metropolitan area. Among the 10,500 who moved to the capital, only 36% came from metropolitan Jerusalem and the rest from elsewhere in Israel.
Still, the towns surrounding Jerusalem also suffered a net loss of people, totaling 1,400 in 2013. So when all the coming and going is added up, metropolitan Jerusalem was a net loser to the tune of about 3,700 people in 2013, the institute estimates.
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