"Housing starts are up 50% since I took office, but they are now falling," Minister of Housing and Construction Ariel Atias told the Association of Contractors and Builders in Israel today. "It's not because of the marketing, but due to severe credit distress. Lately, contractors who won tenders have been returning the land to us because they cannot make the payments. I'm talking about tenders in high-demand areas. What have we done? We've postponed payments from 60 days to 180 days to give contractors time to get organized and go shopping at the banks."
Atias said that one way to ease the severe credit distress is to change the banks' position regarding different economic sectors. "The residential construction and the infrastructures industries should be separated. The industry-wide restriction is a mistake. I've had several meetings with the Governor of the Bank of Israel as well as with the prime minister and finance minister, and I've told them that this separation has to be made, or else apply a Ministry of Finance proposal, which has been around for six months, to cancel VAT on guarantees under the Sales Law."
As for the drop in housing starts, and concerns that the Ministry of Housing lacks land to market, Atias said, "National housing committees plans are reaching fruition. I think that we'll see more marketing in the coming weeks. There are goods on the shelves. We also need to reach agreements with mayors, which is not easy. I believe that, despite the financing problems and labor shortage, the best goods are being taken and contractors will buy lots. The trend of rising apartment prices has changed. Developers are paying less than what the assessor is asking for land, but if the credit crunch continues, and if the Finance Ministry continues to block us, projects will be affected."
Association of Contractors and Builders president Nissim Bublil criticized Governor of the Bank of Israel Prof. Stanley Fischer, saying, "The Governor is highly regarded in Israel and the world, but his actions today are greatly harming young couples. Your decisions have hit young couples in the pocket. The mortgage restrictions have been harmful. The Governor is taking care of the banks, not young couples, and they shouldn’t have to pay the price for the banks' adventurousness."
Published by Globes [online], Israel business news - www.globes-online.com - on May 31, 2012
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