DAVID GREENE, HOST:
In Israel, the cost of buying a home has skyrocketed, actually climbing around 80 percent over the last eight years, according to the government. This trend is upsetting Israelis. And it's also alarming politicians who are trying to come up with ways to make housing more accessible. Here's NPR's Emily Harris.
EMILY HARRIS, BYLINE: This story starts in the corner office of a Tel Aviv real estate agency called Anglo-Saxon. Realtor Yael Sa'ar raises the blinds.
YAEL SA'AR: So you can see outside the window. We're standing on Rothschild Boulevard.
HARRIS: Right in central Tel Aviv.
SA'AR: Yeah. We're in the middle of Tel Aviv. You can see. OK, so you can see a lot of towers here.
HARRIS: Skyscrapers dominate Tel Aviv, Israel's biggest city. This is where the jobs are, where the beach is and where people want to live. But it's expensive. Sa'ar says extremely low interest rates are luring investors to real estate. And that's part of what's driving high prices.
SA'AR: All the alternative investments are very low. Real estate - it keeps rising and rising. People just - they just keep investing. And that's why all the market keeps going up.
HARRIS: Real estate speculation is a problem in many countries. In Israel, to discourage that, the government raised both the tax and the required down payment on second homes. Officials say that has helped. But the broader problem relates to the way Israel manages land.
The government spent years trying to steer people to outlying areas, often near borders, that the state wanted to populate and secure. But most of the jobs are in central Israel. And that's where people want to live.
SHAI BABAD: It's the fact that supply got stuck.
HARRIS: Shai Babad is director general of Israel's Finance Ministry, which recently took charge of housing, as well.
BABAD: The fact that there was too much bureaucracy - there was not enough supply being handed out to the market. And demand is constant.
HARRIS: Constantly growing by almost 2 percent a year, he says. That's due to both immigration, encouraged by the government, and a high birth rate. But let's go back for a minute to that other thing he said. Not enough supply was being handed out to the market. In Israel, the government owns about 90 percent of the land. So it plays an enormous role in developing housing.
Babad says for years, the government charged high prices for land, which slowed construction and pushed up home costs. And Israel's coalition system of government meant multiple politicians, sometimes from different parties, were in charge of various steps in developing housing.
BABAD: The responsibility was scattered around too many entities. And there was not one person responsible. And there was no accountability.
HARRIS: So now there's a new program with just his boss in charge. It includes lotteries for subsidized new apartments for people trying to buy their first home. Ronit Shy just won the right to buy a place that hasn't been built yet.
RONIT SHY: (Through interpreter) I didn't believe it. I answered the phone, and I thought they were pulling my leg.
HARRIS: Shy is divorced. She works two jobs.
SHY: (Foreign language spoken).
HARRIS: She shows me her current home, a duplex created from a bungalow tossed up decades ago, when this town, Rosh Ha'ayin, was quickly built for an influx of immigrants.
SHY: (Foreign language spoken).
HARRIS: For years, she has shared this home's one bedroom with her youngest son, now 18 years old.
SHY: (Through interpreter) At first, my middle son lived here, too. And they slept in the same bed. But that was too difficult.
HARRIS: Her third son, Talor Simchi, is the oldest. He's married and a father. He entered that same housing lottery, but he didn't win. He's been home shopping in Israeli settlements in the West Bank, where government subsidies make housing much cheaper. He doesn't mind that's land Palestinians claim for their future state. It's just too far away from his job, as was the best option he found inside Israel.
TALOR SIMCHI: (Through interpreter). We checked the commute there. And it was impossible. We would have to leave our daughter at 6 a.m., before her preschool opens.
HARRIS: His mom's new place will have four bedrooms. Both mother and son recognize there's some irony that he, with a young family, still has not found a home he can buy, while she will soon have extra room.
SHY: (Through interpreter) The fact that I won and he lost - it was joy mixed with sorrow. But at least I know when I pass away, I'll be able to leave this for them.
HARRIS: It has taken, in Israel, 13 years on average from planning a housing development to handing over the keys. That's more than twice as long as in Europe or the U.S. The Israeli government is promising Shy she'll get her new home within two years. Emily Harris, NPR News, Rosh Ha'ayin.
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