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New High Housing Price Villain: Nesher, Israel's Cement Monopoly

Besides high land prices and tight demand, cement, produced by Israeli monopoly Nesher, is a culprit as well, says MK Einat Wilf.
By David Lev
First Publish: 7/26/2011, 8:40 PM / Last Update: 7/27/2011, 1:15 AM

High land prices and tight demand aren't the only things keeping housing prices high, says Atzma'ut MK Einat Wilf; the materials that go into buildings in Israel are also overpriced, and contribute more than most people realize to high housing prices.

While she generally sees the efforts the government proposed Tuesday to lower housing prices – including accelerating reforms in the Israel Lands Administration, building more dorm rooms for students, and other steps that were announced – as positive, Wilf says that there is another important element that Prime Minister Binyamin Netanyahu hasn't discussed yet: Cement. Specifically, the high prices for cement sold in Israel by the country's larges cement factory, Nesher, which has a virtual monopoly on cement sold and transported in Israel.

“For years the Nesher has held the Israeli cement market tightly and has stubbornly refused to allow foreign competition. Imports could easily be brought in from Jordan, Turkey, Romania, and other countries. This lack of competition has cost the public a great deal.

“The government and Treasury often stress the importance of fighting market concentrations and oligopolies, and increasing competition,” Wilf said. “Here we have a golden opportunity to open up a closed market to competition, in addition to making an important contribution to lowering the cost of building materials, which will lead to more reasonable housing prices.”

A recent Knesset study affirmed that Nesher has for years taken advantage of its monopoly to unfairly charge Israelis higher prices for cement, costs which end up being paid for by the consumer. The high cost of cement is even partially to blame for Israel's high tax burden, the study said; because of those costs, taxpayers had to pay more for construction of schools, army bases, and other publicly funded projects. According to the study, cement counts for nearly 10% of the cost of building in Israeli construction.