All politics is local, as former U.S. House of Representatives Speaker Tip O’Neill used to say. In the Israeli elections, perhaps the biggest issue is a highly local one that the rest of the world has barely noticed: high housing prices. If Prime Minister Benjamin Netanyahu loses his grip on power in Tuesday’s elections, it will have as much—or more—to do with voters’ disdain over costly housing as with the issues that animate the rest of the world: the Israeli-Palestinian peace process and the conflict over what to do about Iran’s nuclear program, to name just a few.
Americans were riveted by Netanyahu’s address to a joint session of Congress on March 3, but Israelis were more agitated by a Feb. 25 report by Israel’s state comptroller, Joseph Shapira, on the country’s housing crisis. The 294-page report said house prices rose 55 percent and rental rates rose 30 percent from 2008 to 2013. The chart below shows the inflation-adjusted cost of buying an apartment, which declined in inflation-adjusted terms for about a decade from the late 1990s, then jumped in recent years. In the chart, prices in 1989 equal 100. The red line represents the average growth rate from 1967 to 2013. (The report is available only in Hebrew.)
