A Decade Without a Housing Policy: How the Government Withdrew Support for Housing & the Social Protests of Summer 2011
Author: Gilat Benchetrit Policy Research

In the summer of 2011, a wave of social protests broke out in Israel, and what captured the headlines was the issue of skyrocketing housing prices.

 Indeed, in the decade preceding the protests, the government withdrew from the housing market despite its involvement since the state’s establishment.  The more limited involvement of the state in the housing market meant that the portion of the market that remained were those who were not in need of state assistance.  The extent of new building did not match the population’s rate of growth, and so the result was a housing shortage and a sharp rise in housing costs.

In the current decade, subsidies that had in the past allowed households to purchase a flat were cut back, and a sharp decline in the number of home owners ensued. The only relevant means that remained for the needy was a rent assistance grant, although it makes an unstable living arrangement.  The government’s reluctance to be involved in the housing market has taken a heavy toll on several levels. It has harmed the planning vision of the National Outline Plan (NOP 35), widened the gap between the geographic center and the periphery, increased prices and inflation, which ultimately resulted in the Bank of Israel’s intervention in the mortgage market, and finally, led to frustration and bitterness amongst wide portions of the population.

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