"The government is setting the initiatives and the processes in motion, but the agencies doing the work are private concerns," Minister of Construction and Housing Yoav Galant told the annual Dun & Bradstreet Israel Real Estate Forum, part of the Dun's 100 Forum, today in Givatayim. The forum was moderated by "Globes" real estate correspondent Dror Marmor.
"Israel has 250,000 families that cannot make ends meet, and we are giving rental assistance to 160,000 families. We are taking action to narrow gaps and increase equality, including through public housing. There has been no substantial housing initiative in recent years, and that is why housing prices have doubled over the past decade. It takes 13 years in Israel from the time a residential project in Israel is planned until it is occupied. That is unacceptable. Our challenge is that we will have to provide one million more homes in the next 20 years: 600,000 for the religiously observant and non-religiously observant public, 200,000 for the haredi (ultra-Orthodox) public, and the rest for the Arab population. I see what we have done over the past two years, and I think that the minister of finance and I have realized that something is needed to overcome the bureaucracy, so we decided to consolidate all the authority in the real estate sector: control of the money, the land, and the planning."
Galant added, "We chose to concentrate on non-homeowners with the buyer fixed price plan. The processes are basically benefits granted as subsidies for people. As a country, you are foregoing revenue. We are giving people an average discount of NIS 200,000 on the land. We did this, and then we balanced the budget - a rare thing in politics.
"In 2017, we'll issue double the number of building permits that were issued in 2014, and we'll also double the number of housing starts. The entry of additional manpower will bring the system to a completely different place. I realize that this is a significant measure that has made the state into the developer and the developers into contractors.
"Building an apartment in Israel costs around NIS 700,000, including taxes. That is the situation; all the rest is profit. I know this because the contractors who won the buyer fixed price tender in Afula are giving us apartments for these prices, and want to take part in more tenders. That is how the situation is."
"Pouring cold water on a red-hot market"
Galant continued, "We're pouring cold water on the red-hot real estate market. We see that they have almost completely stopped selling luxury housing for a year now. The buyers are not agreeing to pay the prices demanded of them. I think that this plan will affect the entire market, not just non-homeowners.
"Mayors and government ministers have conflicting interests. If a mayor gets homes on which the municipal property tax is low, his municipality does not perform well, which reduces his chances of winning the next election. The government, however, has a different task - creating homes. We are making every effort to make sure that everyone who wins a home gets it within a reasonable time. I think that legislation to change this situation is needed, so that the ministers will call the tune."
Galant was also asked what he thought about increasing the number of housing starts, when the measures themselves were making things go in the opposite direction. He answered, "The stabilizing of the real estate sector is an accomplished fact, and anyone who looks at it realizes that this is an achievement. When I said six months ago that demand was shrinking, they looked at me like I was crazy, but that is now the reality. 30,000 couples have won buyer fixed price lotteries. Some of them will soon move into their homes, while others have the opportunity to buy a home at a discount. Had we not taken all these measures, it would not have happened. People also have to compromise - not everyone has to live in Tel Aviv."
Published by Globes [online], Israel Business News - www.globes-online.com - on September 6, 2017
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