Office of Hi-Tech Employees/ShutterStock
The cost of living in Israel has soared in recent years to new highs in all areas of life, from the prices of tomatoes in the supermarket, through the prices of electricity and property tax to the prices in restaurants.
However, the main influence on household expenses in routine is the housing sector, since it constitutes one third of the general monthly expenses of a household in Israel.
The real estate industry demonstrates in the best way how wage erosion damages the ability to buy an apartment every year, and this in light of the extremely low average wage increase compared to the increase in apartment prices, especially in the last two years. For example, if in 2019 it took a person 249 full average salaries to reach the purchase apartment in Tel Aviv, in 2023 it has already risen to 301 salaries - work for more than four full years. This is how it is when apartment prices rise in 4 years by nearly 40% but the average salary is halved.
Before the real estate conference of the Handel Center "N," which will be held at the end of March in Eilat in collaboration with Media Real Estate, the real estate center examined the relationship between the prices of apartments in selected localities in Israel and the amount of full salaries that a household needed in order to complete the purchase of an apartment.
Unfortunately, the conclusions reached are not positive: attrition Salaries compared to apartment prices in Israel continue to grow and the dream of owning an apartment continues to recede, perhaps with the exception of one and only one sector - the high-tech sector whose average salary is the highest in the economy by a significant gap from the average salary.
The hardest in Tel Aviv: over 37 years to get to an apartment
The real estate center's investigation shows that in a household where both spouses receive the average salary in Israel, it will take over 37 years to reach an apartment in Tel Aviv. However, if both spouses work in high-tech, it will take less than 17 years.
At the end of 2023, 23 salaries were required in Israel more than in 2019 to get to an apartment, for an employee with an average salary in the economy. In Tel Aviv, 52 more salaries are needed to get to an apartment - this is more than 4 years of work. The gap in Jerusalem is also large - in 2023, 37 more salaries were required than in 2019, Over 3 years of alleged work.
Only in the capital of the south, in Be'er Sheva do you need less salaries today than 4 years ago. According to the data, to purchase an apartment in the city you need 5 less salaries. Apparently, in Be'er Sheva the prices of apartments did not rise as meteorically as in the other cities relative As for the increase in the average salary, the situation is better in Haifa as well: an increase of only 3.5 salaries compared to 2019.
Apartment prices have increased twice the average salary
Dan Kachanovsky, owner and CEO of the real estate center, points out: "The middle and lower classes are eroding, and their purchasing power and the economic gap between the classes is only increasing over the years. The average salary in Israel has indeed increased in the last 4 years by about 20%, But apartment prices have risen by an average of 39%, which is twice as much. This figure alone illustrates the difficulty of obtaining an apartment in Israel, especially for young couples and young families. Unfortunately, the state is not doing enough to help reduce this gap, which begins with determined and significant actions to lower apartment prices, if By lowering land prices, the developers move, providing incentives or more state tenders for apartments at a reduced price, apartments for long-term rental or reducing taxes related to housing."
Methodology
• The test was carried out based on the analysis of the data of the Central Bureau of Statistics both regarding the average apartment prices in different localities and regarding the average salary in the economy, segmented into different occupations.
• The assessment regarding the time it takes for a household to reach an apartment - the test was based on the assumption that a third of household expenses go to housing, according to the CBS publications.
• The calculation that was made - a household includes two salaries according to the accepted definition. The price of the apartment is divided by the annual investment in housing = for the time it takes to get to the purchase of the apartment.
• The pure ratio - the ratio between the average salary and the price of the apartment [without referring to the issue of mortgage payments whose repayments are affected by interest rates that cause an unnatural amount of time to complete the purchase of the apartment]
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