Excessive government intervention in the housing market makes housing in Israel much more expensive than it should be. Among the myriad artificial policies that constrain building in Israel, Kohelet researchers Dr. Asher Meir, Ziv Rubin, Sandrine Fitoussi, Itamar Yakir, Dr. Michael Sarel and Dr. Avichai Snir identified three cardinal barriers:
- Public ownership that greatly restricts access to land;
- A distortionary and centrally controlled municipal taxation regime that greatly reduces the incentives of municipalities to approve new construction;
- A cumbersome planning system that involves immense expense, time and uncertainty in getting approval, even for building plans that completely conform to all relevant regulations.
The policy paper recommends immediately making a large amount of land in urban areas available for private ownership and development; reforming the municipal revenue structure in order to give local authorities more fiscal autonomy and restore their natural incentive to encourage development; and implementing reforms that would make approval of a building permit automatic contingent on the plan meeting whatever transparent criteria the planning authorities decide upon.
See the full paper.
