Treasury battles housing prices

The Finance Ministry plans to instruct the planning commissions to approve at least 140,000 housing starts in 2011 and 2012.

Worries about a real estate bubble have prompted the Ministry of Finance to intervene, and it will include comprehensive real estate reform in the 2011-12 economic arrangements bill that will be attached to the budget bill.

A ministry of document states, "The rise in housing prices is making it difficult for young couples to buy an apartment, and it has negative macroeconomic consequences, such as inflationary pressures and affecting the disposable income of individuals for consumption and savings." The ministry goes on to present the main measures that it proposes for enactment as part of the economic arrangements bill.

The Ministry of Finance's first measure is to set quantitative targets for approval of residential projects, in order to meet demand. About 45,000 housing starts are currently approved annually. The ministry plans to instruct the planning commissions to approve at least 70,000 housing starts a year in 2011 and 2012 (for 140,000 housing starts altogether) as follows: 10,000 housing starts a year each in the Jerusalem, Northern, and Southern districts; 6,000 housing starts a year in the Tel Aviv District; 25,000 housing starts a year in the Central District; and 9,000 housing starts a year in the Haifa District.

The Ministry of Finance also plans to promote high-quality residential construction in outlying areas. The ministry wants the planning commissions to give priority to high-quality residential projects in the periphery, as part of these targets. The planning includes open public space and expanded lots or the construction of private houses up to a limit of two housing units per 1,000 square meters. The objective of the high-quality residential planning is to encourage and strengthen settlement of the periphery.

Published by Globes [online], Israel business news - www.globes-online.com - on June 13, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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