Watchdog: Netanyahu Governments Failed to Resolve Housing Crisis

'Only a year and a half after its establishment, and after a 36% rise in prices, did the Netanyahu government identify the need to stop the rise in housing prices,' concludes the State Comptroller’s report.

Nimrod Bousso
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A typical Israeli apartment block. Four-room apartments in Tel Aviv suburbs have become prohibitively expensive for most young couples. Credit: Tomer Appelbaum
Nimrod Bousso

It took the Netanyahu administration more than a year after taking office in 2009 before it recognized that the government had to keep housing prices from continuing their steep ascent, State Comptroller Joseph Shapira wrote in his special report on the housing crisis, which was released on Wednesday.

Housing prices climbed some 36 percent in inflation-adjusted terms from 2008 to 2010 and the public was spending more and more for housing, the report said.

“Only in July 2010, over a year and a half after it took office, did the 32nd government headed by Mr. Benjamin Netanyahu identify the need to halt the steep rise in housing prices, and decided there was a need to establish a housing policy to lower home prices while putting an emphasis on homes for young people (families and singles) who were buying their first home,” wrote Shapira. “Nonetheless, housing prices continued to rise in 2011 and 2012, though in a more moderate manner.”

Shapira detailed a long list of failures in the last three Israeli governments. Ehud Olmert’s government laid the foundations for the start of the housing crisis, the report said, adding that the 32nd government acted slowly, did little and did not properly carry out most of the recommendations in the Trajtenberg report on lowering the cost of living — and all in all failed completely in the handling of the housing crisis.

In the wake of the social protests of the summer of 2011, the main step taken by the cabinet that took office in 2009 — when Yuval Steinitz served as finance minister and Ariel Atias was housing minister — was the establishment of national housing committees, which were meant to bring about a massive increase in the number of homes built. These committees turned out to be ineffective and few new housing units were built as a result.

The comptroller’s critique of the last government, the 33rd — with Netanyahu as prime minister, Yair Lapid as finance minister and Uri Ariel as housing minister — was only partial, which is a shame, since it makes the report less relevant and up to date. But the report emphasizes the lack of any policies, by this government as well, for creating affordable housing. It said the last government focused on an initiative for creating a long-term rental housing market, which so far has produced very little — at an astronomical cost.

One of the major reasons for this continued failure, according to the comptroller’s report, is a total lack of any overall long-term government policy.

“Only in July 2013 did the cabinet decide to appoint the housing minister ‘to lead the formulation of a long-term housing policy’ — a task which was not yet implemented by the time the [state comptroller’s] report was completed,” the report said.

The report traces the housing crisis to 2005, when National Master Plan 35 was approved. It was an ambitious plan aimed at dispersing the Israeli population, in a bid to reduce housing demand in the crowded center of the country. But the public did not change its mind about wanting to live in and around Tel Aviv just because government decided it was a good idea.

“The actions of initiating the planning and development of land for housing and employment continued to be made without any overall and integrated strategic view of the purposes and goals of the development desired by the state,” the report said.