Making Ends Meet – Household Income, Expenditures and Savings in Israel
Author: Eitan Regev
December 17, 2014
This chapter surveys the balance of household income, expenditures and savings in various population groups and at various income levels, with special attention to the patterns of consumption and savings in the Haredi (ultra-Orthodox Jewish) sector and its activity in real estate.
A large part of this chapter is devoted to the way the purchase of apartments is financed among the Haredi population in the face of its limited resources. The data indicate that the average Haredi household has a structural deficit of over NIS 3,000 a month between its income and expenditures (about a quarter of its expenditures), which is partially financed via extensive loans – thus generating a constant increase in Haredi households’ indebtedness to banks and other lenders (such as benefit society funds). Haredi households’ monthly mortgage payments rose by 72 percent in real terms over the last decade, and the share of Haredim with mortgages and the extent of their investment in real estate rose substantially, as well. It appears that a large part of the financing for these investments has its origin in unreported capital from foreign sources, and the proliferation of such investments might have a non-negligible effect on the demand for apartments (and apartments for investment, in particular) and their prices. An examination of the balance of income and expenditures in all sectors reveals a disturbing picture: the average household is unable to buy an apartment without assistance, usually from their parents’ savings which are constantly dwindling.
This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2014, Dan Ben-David (editor).