Shikun u'Binui Real Estate CEO Tamir Dagan said, "I see greater difficulties at our sales offices. Young couples come and say that the bank is creating problems in granting a mortgage. In practice, belying all the declarations, the red tape on the ground continues, and it is very hard to deal with the supply." He spoke at an economic conference in Tel Aviv today.
"The Bank of Israel did not try to make things difficult for young couples to buy an apartment, and there is no decline in taking mortgages from banks. With all due respect to the Bank of Israel, it is also very important to also deal with the problem of supply, because more and more young couples want to buy an apartment, which is a legitimate desire," said Mizrahi Tefahot Bank (TASE:MZTF) CEO Eli Yones.
Question: Some contractors claim that the Bank of Israel and the Ministry of Finance are disrupting efforts to increase the pace of construction.
Dagan: "We have the wherewithal not to take bank loans for each project, because we have other sources. We've actually increased building starts because there is demand."
Where is the risk in Israel's real estate market?
Yones: "There's a mood of a bubble, and the focus of risk is in the price of land. At Mizrahi Bank, we don’t look at the ratio between an apartment price and the credit, but at the ability to repay, and when that is undermined, there is a risk of severe harm to householders and the burden of payments."
Does the government have the power to act, after identifying the real estate market as problematic?
Yones: "The Israeli government's monopoly, now that we're talking about oligopolies and over-concentration, is the Israel Land Administration, which is riding the wave of high prices. This monopoly sets the price for the next apartment, because it is the sole supplier of land for building in Israel."
Dagan: "In politics, there is a search for a quick fix, but they don’t exist in real estate. Politicians want headlines in tonight's news; they don’t deal with something that will only bear fruit in several years, beyond their term in office."
Published by Globes [online], Israel business news - www.globes-online.com - on June 19, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011