Newspaper Page Text
Friday, June 16, 1972
CARL ALPERT
THE SOUTHERN ISRAELITE
p *f Three
Israel’s Housing Crisis
HAIFA — There can be too
much of a good thing—or suc
cess which is so successful that
there is danger of its becoming
a failure.
Something of that sort may be
said about Israel’s program to en-
oourage Jews overseas to build
homes in Israel. The principle
was simple and logical. If rel
atively large numbers of Jews
from Atlanta or London or
Johannesburg would invest in
construction of a second home
for themselves in Israel they
would bring foreign currency
into Israel and at the same
time create strong personal
ties with the country.
A special company, Isralom,
was set up for the purpose, and
the business began to boom.
Sales are made not to actual
immigrants, but to persons
living overseas who may have
mixed motives. Some may look
upon the purchase as an invest
ment. Some may think of it as
an insurance policy, or perhaps
just a winter home to be oc
cupied for a few weeks, or a
month, each year.
As a matter of fact, such
homes have become a most prof
itable investment and in the
present housing boom in Israel
their values have risen any
where from 25% to 50%
But the program has become
too successful. Today there is
a serious lack of building ma
terials, a critical shortage of
construction labor, and a dis
turbing reduction in the num
ber of suitable plots. Since the
demand for housing—by immi-
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grants and by newly married
couples—continue to mount, the
result has obviously been to
force prices upward. And the
investor from abroad is an im
portant contributing factor in
that demand.
The economists and housing
experts have lined up on both
sides of the argument as to
whether to encourage such for-
reign investment, or to discour
age it.
The Zionist goal has always
been to encourage closer ties
with Israel, and those who
build homes here will eventual
ly come to live here, claim the
proponents of the program. The
reply is that an unhealthy sit
uation is created with a new
class of wealthy absentees
whose luxurious homes remain
locked most of the year, while
young Israeli couples, newly
married, can’t find a place to
live within their means. 1
The gale of these apartments
brings hard currency into the
country, and is therefore in the
category of a valuable export,
continue those who favor the
scheme. The reply: it puts mon
ey into circulation and contri
butes to inflation at the very
time when the government is
trying to counter inflation by
drying up credits and ready
cash. Furthermore, the foreign
sales contribute to the driving
up of housing prices generally.
That could not be is the re
tort. Of the 45,800 family units
sold in 1971 only 2.7% was to
foreigners. The reply: a mislead
ing statistic. This 2.7% of the
number of apartments built was
of larger, more expensive units,
which used up more material
and more labor, and one esti
mate is that 15-20% of money
spent on housing comes from
these sources, making it a seri
ous element in the competition.
There is no easy answer to
the problem, and the conflict in
view is perhaps best indicated
by two recent proposals. Says
one: Foreign investors should
not have the privilege of con
verting their funds into for
eign currency for withdrawal
from Israel in the event they
sell their homes. This restric
tion will discourage all except
those who seek permanent ties
with the country. And the op
posite view: To the contrary,
encourage the foreign investors
to sell the homes and withdraw
their money. For one thing it
will put the houses on the mar
ket to help feed the hungry
demand, and in the second
place, the withdrawal of the
money from the country will
achieve exactly what the gov
ernment wants — reduction of
money from circulation.
Obviously, both sides can’t
be right. And in a sense I am
reminded of the tourists who,
in the early 1950’s whe® there
was austerity and food short
ages, ate the meat and eggs at
their hotels with a guilty con
science, feeling they were
taking food out of the mouths
of Israelis.
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