Housing and taxes woes

There is a difficult housing situation in Israel. In a nutshell, property prices are too high, and continue to rise. Young people are – generally – unable to afford to buy. It’s a problem that is not going to be solved overnight, but it would be helpful if people recognized one of the universal laws of economics before offering solutions: supply and demand. In short, there is a high demand for the main areas, like Tel Aviv, and there is a limited supply. So long as that situation continues, high prices are inevitable. (Rents are also high, not to say astronomical.)

The government have tried to take the heat out of the property market, not so much to bring prices down, but to try and avoid a property crash.

One method they have used has been increasing the restrictions on mortgages.

Another method they have used has been increasing the purchase tax where somebody buys a second property. This latter method seems to be easily avoided judging by anecdotal evidence. There’s an article at Globes (here) which sheds some slight on the situation, and is worth reading for background purposes.

Regardless of whether this type of tax is a good idea, it does seem that the state could make a better effort in collection, and to make avoidance much more difficult. Or, if not that, to come up with a flat rate tax that everyone had to pay.

And there still needs to be a concerted effort to deliver affordable housing.