French Jews are Coming – Make Housing a Priority

Stoked by increasing Aliyah by French Jews, the rising total number of immigrants to Israel and the prospect of further increases threaten to cause another upward surge in the price of housing. Given the large 80% increase in apartment prices since 2007, a further jump could be politically severe. Prompt political action to address bottlenecks affecting the supply of new housing is needed to prevent such a spiral.

Since 2006, a crescendo of events in France has made that country a less hospitable and more dangerous place for the large Jewish population that resides there. It perhaps started with the horrendous torture/murder of Ilan Halimi in early 2006. The March 2012 killing of four Jews (including three children) outside a Jewish school in Toulouse prominently highlighted the growing violence and vulnerability. The controversial performances of the comedian Dieudonne, although banned in some locales, have increased the sense that attacking Jews is becoming mainstream. Many were shaken by the explosion of anti-Jewish hostility during the summer of 2014 Gaza war, where French Jews served as convenient stand-in targets for anger directed at Israel. It was particularly repugnant when a mob tried to storm a synagogue in Paris during July, trapping some 200 Jews inside, an event that recalled the kind of attacks that were common during the Nazi era. Finally, last week’s audacious dual murderous attacks at Charlie Hebdo on Wednesday and at a Kosher food store on Friday have shocked many in France and around the world.

French security services have been unable to prevent the rising tide of Islamist violence, much of which targets Jews. In August 2014 it was reported that nearly 900 French citizens were in Iraq and Syria, acting on behalf of Islamic State; this suggests that Islamist violence might increase as some of these citizens return to France. The current Hollande government seems weak and unpopular, and support for the National Front has grown.

As increasing numbers of French Jews worry that their future in France might be bleak, serious interest in emigration has ballooned. Part of this has been manifest as a surge of interest in Aliyah to Israel. As Natan Sharansky recently stated, inquiries to the Jewish Agency regarding Aliyah reached 50,000 in 2014, with the number of information seminars offered to meet this demand averaging two per night in 2014 versus one per month in 2013. In 2014, there were nearly 7,000 olim from France, more than double the number for 2013. For the first time, in 2014, there were more olim from France than from any other country. And over the horizon, there might be increased Aliyah from England. Danny Cohen, director of BBC TV, made headlines recently by stating “I’ve never felt so uncomfortable being a Jew in the U.K. as I’ve felt in the last 12 months. And it’s made me think about, you know, is it our long-term home, actually.” And, the Ukraine remains a potential source of significant Aliyah.

What next in France?

Optimistically, it is possible that the disturbing events of the last six months could be followed now by calmer, more “ordinary” times, with no spectacular murders and fewer episodes of hostility directed at Jews. If so, the recently elevated fears for the future of Jews in France could dissipate and Aliyah numbers might decline. Yes, possible, but perhaps too optimistic.

A more realistic scenario, unfortunately, is that recent trends will continue, with additional attacked on Jews and Jewish institutions. Their occurrence could trigger a larger move towards emigration, with Israel receiving a significant jump in Aliyah. The presence of a meaningful number of French Jews already in Israel increases the attractiveness of Israel as a possible destination for those Jews who decide to leave France.

In 2014, a total of 26,500 olim arrived in Israel, a 32% increase over 2013. Were annual immigration to rise strongly from 2014 levels, the additional demand for housing could lead to a disproportionate surge in housing prices if housing supply is relatively unresponsive in the short run. As noted, apartment prices in Israel have risen about 80% since 2007, and the difficulty of many young Israelis to afford housing has become a potent political concern. A further jump in the price of housing would be highly unpopular.

To prevent this, there is a critical need for a serious effort to increase the supply of housing. For several years we have been told that reforms in the housing sector were in the works, but not much has happened. Now, with the impetus of rising Aliyah, perhaps housing will become one of the highest domestic priorities of the new government to be established in Israel after the March 17 elections.

Some history: The collapse of the Soviet Union in 1989 opened the floodgates of Jewish emigration and more than 330,000 Soviet Jews arrived in Israel in 1990 and 1991. More than 50,000 per year arrived in most years during 1992-2000, with a total of more than 880,000 arriving between 1989 and 2000. This inflow required a massive expansion of housing and Ariel Sharon was appointed Minister of Construction and Housing in 1990. He was also Chairman of the Ministerial Committee on Immigration and Absorption. While the scale of Aliyah from France and elsewhere will undoubtedly be smaller than the flood of immigration in the 1990s, if pessimistic scenarios are realized, it could still be a major inflow.

The policies implemented in the early 1990s should be reviewed. In crafting new housing policies for 2015 it might be wise to appoint someone to take the kind of leadership position exercised by Ariel Sharon during 1990-92. And even if the inflow of olim from Europe turns out to be modest, a meaningful expansion in the housing stock will be welcomed by many Israelis who cannot afford apartments at current price levels.

Yes, there are complex implementation issues, some quite political. Where to expand housing? How much over the 1949 armistice lines? How to expand supply without creating excessive windfall profits? How much of the new housing should be devoted to the rental market? These are solvable issues – what is needed is the political will to make their solution a priority.

About the Author
Lewis Rosen is a retired economist who has lived in Jerusalem for more than 35 years. Born and educated in the US, he worked for the Office of Economic Opportunity for two years in Washington D.C. and was on the economics faculty of York University in Toronto, Canada for 13 years. In Israel he has been involved in a wide range of business planning and economic analysis projects.