Israelis have been protesting over rising property prices and rents since mid-July, and although the initial protest began in an upmarket section of Tel Aviv, it has now spread to Jerusalem, Haifa and Beersheba.
Property prices here have increased by around 40% during the last three years, and this is partly due to the fact that planning and construction here is extremely slow. Property prices increased by 13.7% between April 2010 and April 2011, which is around triple the rate of inflation, and in the Knight Frank Global House Price Index for the first quarter of this year, Israel was ranked fourth behind Hong Kong, India and Taiwan.
Rents have also increased substantially, and many Israelis are now complaining that Tel Aviv has become a city for the rich. Demand for housing has often exceeded supply in Israel, but the situation has become much worse over the last few years due to low interest rates and easier access to housing loans and mortgages.
The economy here is in pretty good shape and is expected to grow by around 4.8% this year, meaning that many more Israelis are looking to buy better homes. The property market here is somewhat unique, as 93% of the land is owned or managed by the government which dates back to the founding of the nation in 1948 and a policy designed to preserve the Jewish state. Most property sales here tend to be long-term leases, so the government has unusually high control over the way the land is used.
Builders have to negotiate large amounts of bureaucracy in order to gain construction permits, and this has constricted the supply of apartments, increasing the prices.
The Israeli Prime Minister Benjamin Netanyahu has promised to cut red tape, and has also pledged to build 50,000 new homes during the next 18 months, but the protesters are asking for rents to be regulated and property prices to be curbed.
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