Any review, in any field, is based on data, specifically in economic fields. Are you interested in finding out whether taxes should be raised? Check the data. Interested in whether the healthcare reform succeeded? Check the data. Curious about the cost of living in Israel? The data will define the relationship between the current reality and the situation last year and whether, for example, in a five-year retrospective, the social protest affected the real estate sector
Without reliable data, no decisions can be made and the free market cannot operate. Worst of all, a lack of clarity provides the most fertile ground for manipulation and disinformation by different parties. Data is important not only for government decision-making, plans or reforms, but also instrumental in enabling the public to examine their necessity and correctness and discover whether they have been effective.
Only recently, we have received a reminder of two cases showing that those required to analyze the data will find it extremely difficult to understand who is right, who is wrong and who spreads disinformation. In Israel's real estate market, data accuracy and compatibility between different entities publishing surveys or overviews is far from optimal. How could an official entity, such as the Central Bureau of Statistics, publish data indicative of a rise in apartment sales in the past two months, of a larger number of apartments being sold, while the Ministry of Finance Chief Economist publishes data indicative of a significant decrease in apartment sales? Does this make sense? These are not apartments 'on paper' of this or that acquisition group, but homes with walls, concrete, blocks and roofs. Tangible products, for which the number of sales could, ostensibly, be easily checked. And nevertheless, two official entities make two contradictory claims regarding the situation. The disagreement is due to counting methods. Who is right? We can continue arguing indefinitely.
How many apartments are still lacking?
Another instance of incompatible data which has recently hit the headlines further underscores the lack of conclusive data regarding the situation in the sector. For many years, there have been claims that Israel has a shortage of 100,000 apartments. This supply shortage is one of the key reasons for the rising apartment prices in the past few years, or so it has been claimed. However, in the past week, out of the blue, a senior economist in the Bank of Israel claimed, in a respectable forum, that the real shortage amounts to only 50,000 apartments and, if the current rate of buildings starts is maintained, the shortage will be resolved in the next few years. So, how many apartments are really missing? No official entity really has an answer.
The estimate mentioned above is based on data from the Jewish sector. Obviously, complete data must also include the Arab sector. But, guess what? There is no data enabling a real analysis. A decision regarding unification and improvement of real estate market data was made as early as first housing cabinet session, the special forum established to tackle the housing crisis. This problem was noted even then. But this decision was made a long time ago, in 2013, and the established team has been trying to cope with the situation ever since with no conclusions or changes, neither big nor small.
If anyone is really interested in addressing the housing crisis, the whole issue begins with the data. Alongside plans and announcements, the Ministry of Finance, Ministry of Construction and Housing, Central Bureau of Statistics, Land Appraisal Department, Israel Tax Authority and other relevant entities must sit, once, and decide what is being measured, how, why, how much and when. If this does not take place, no progress will be made and, on the contrary, significant steps based on incorrect data may even lead to a crisis. Now is the time to come to our senses.
Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2016
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