A study by the Institute for Structural Reforms says that spending on housing by Israel's poor is using up their already meager salaries, especially with the growth in rental housing. The result is that the poor are becoming even poorer than appears from income tests.
In the past decade, the proportion of resident-owned apartments fell from 73% to 66%. 160,000 families now reside in rental apartments. Few of these residents chose to rent on the basis of rational calculation or because it was better for them. Most struggle to make the money to pay rent, let alone accumulating the capital needed to buy their own home.
82% of Israel's top 10% own their own homes, compared with 40% of the bottom 10% of the population. This is a factor in perpetuating poverty for generations. Not only do the poor earn little, most of their income is directed to putting a roof over their heads - a roof that they do not even own.
According to an analysis by the Institute for Structural Reforms of a Central Bureau of Statistics survey on household spending, people in the bottom 5% of Israel's population who do not own their own home spend half of their monthly income on housing (about NIS 2,000). People in the bottom 5% who own their own home spend 24% of their monthly income on housing (just over NIS 1,000).
In contrast, people in the top 5% of Israel's population who own their own home spend 10% of their monthly income on housing (about NIS 3,000), and the few people in this group who do not own their own home spend 20% of their monthly income on housing (just over NIS 4,000).
Shraga Biran, who founded the Institute for Structural Reforms in 2010, concludes that the factual basis of Israel's decision making is wrong, and that income is not the test of poverty because it does not present a proper picture of the country's poor who do not own their own homes.
Published by Globes [online], Israel business news - www.globes-online.com - on January 30, 2011
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