Israelis spending more than they earn, report shows

Average Israeli family cannot ‘make ends meet’ because of drastic increase in housing, food prices over past decade

Marissa Newman is The Times of Israel political correspondent.

Illustrative photo of a woman shopping for produce in a supermarket. (Abir Sultan/Flash90)
Illustrative photo of a woman shopping for produce in a supermarket. (Abir Sultan/Flash90)

The average Israeli household spends hundreds of shekels more than its income monthly, primarily due to housing costs, a report by an Israeli policy center showed.

The findings of the state of the nation report by the Taub Center for Social Policy Studies highlighted growing personal finance troubles amid skyrocketing real estate prices, which climbed by 53 percent between April 2007 and July 2013, driving up the cost of living dramatically.

The report, released Wednesday, was met with fierce condemnation against the government by prime minister hopeful Isaac Herzog, who said it demonstrated that it was time to oust premier Benjamin Netanyahu, “who placed the entire country in overdraft.”

“The average Israeli family cannot make ends meet; across all population groups in Israel, expenditures exceed income,” a statement from the Taub Center said. “High housing prices are the primary reason for this phenomenon, and for [non-ultra-Orthodox] Jews, the purchase of an apartment is the factor that shifts them from a positive to a negative monthly balance.”

“The average household cannot purchase an apartment without assistance, which usually comes from their parents’ gradually decreasing savings,” it added.

Among all populations except for the ultra-Orthodox and Arabs, the average household spends NIS 864 ($220) more than its monthly income. Among Arab households, the gap stands at NIS 1,919 ($488), and the ultra-Orthodox exceed their income by NIS 3,209 ($817).

With regard to the housing crisis, the Taub Center researchers found that overall more people owned homes in 2012 (73.5%) than 2006 (72.3%).

The higher prices took its toll on younger buyers, however, as among younger households, between the ages 25-34, the number of non-homeowners rose from 43% in 2003 to 54% in 2012.

By international standards, Israel scores high on residential crowding, “as reflected by a low number of rooms per person” within homes, and the construction process is significantly lengthier.

“Israel has very high residential density… even relative to countries with higher population densities,” the report said. “Out of 36 countries examined, only 5 countries have a lower average number of rooms per person than does Israel.”

In terms of residential construction, the report maintained that in Israel, it was a 13-year process “of which only two years are for construction while the remaining 11 years are devoted to bureaucratic processes – assuming the construction plans are ultimately approved.”

“By comparison, in most European Union countries, the maximum amount of time needed to obtain a building permit is 8-12 weeks,” it said.

The cost of food products also saw a significant increase since 2005, the report said.

“In 2005, most food products in Israel were cheaper in comparison to the OECD, but within six years alone, all food categories (aside from vegetables and fruit) have surpassed the OECD in terms of price,” it said. “Dairy products in Israel were only 6% more expensive than the OECD average in 2005, but were 51% more expensive in 2011; fish products were 30% cheaper in 2005, but were 25% more expensive than the OECD average in 2011.”

A separate report released on Tuesday by the National Insurance Institute showed that 1.6 million Israelis — among them 756,900 children — continue to live under the poverty line.

Arab-Israel educational integration spikes

The number of educational institutions that cater to a mixed Jewish-Arab population increased by 59% between 2003-2013.

A sizable number of those institutions are special education programs: a majority of the mixed Jewish institutions where between 6%-50% of of its students are Arab Israeli are special needs programs. One-quarter of Arab Israeli schools which accept Jewish students are special education institutions.

Most mixed schools are attended by students of the middle and upper socioeconomic classes. Among the poorest populations, most of which are Arab Israeli or ultra-Orthodox, there are no mixed schools.

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