Netanyahu: Housing shortage is a real problem

The prime minister proposes building 10,000 student dorms, discounts on land, and higher taxes on empty apartments.

"Israel's housing shortage is genuine, it isn't something that someone has made up," Prime Minister Benjamin Netanyahu at the start of his press conference today to present his emergency housing plan. "Young renters cannot buy an apartment. They are forced to live with their parents, and some are even forced to live with their grandparents. There's a severe housing shortage, which I identified back when I was finance minister. We have a small country and we're making it even smaller because of the government monopoly called the Israel Land Administration, which releases land in driblets."

As for his emergency housing solution, Netanyahu said, "I call this affordable housing for students and homeless young people. Home prices are rising because there aren’t enough apartments, and there aren’t enough apartments because it takes years to build apartments here, because of our bureaucracy. Our bureaucracy is strangling us; we're ranked in 121st place in construction competitiveness. A three-room apartment which cost NIS 800,000 now costs more than NIS 1 million."

Netanyahu's emergency plan includes the following measures:

  • The construction of 10,000 new student dorms on land given to contractors gratis.
  • Lower bus and train transport fares for students nationwide, so they can reside outside city centers. The discount will be valid for one year. Netanyahu said, "Students can travel from Lod to Tel Aviv in 23 minutes."
  • Construction of low-rent housing. The government will market land for thousands of low-rent apartments. The land will be marketed at discounts of 25-100%.
  • The government will market land at 50% discounts for low-cost housing in "occupier price" tenders, which Netanyahu said would cut the land cost for a new apartment by NIS 150,000.
  • The government will limit the exemption on arnona (local property tax) on empty apartments to six months, in order to deal with the problem of 140,000 empty apartments. Mayors will be allowed to raise arnona on empty apartments to entice their owners to sell or lease them.

Netanyahu promised that these measures would "reverse the trend in housing supply and give various segments of the population access for affordable housing. The solutions are practical."

Netanyahu claimed that the government's measures over the past two years to deal with the bureaucracy and the cancellation of decisions by previous governments, such as the ban on building in central Israel, and the expediting of the sale of land for housing, which boosted the marketing of land by 40%. "These actions are important have begun to change the trend in home prices," he said. "We have also offered incentives for construction, and we're seeing an increase in housing starts."

"Next week, we will complete two big changes. We will remove the planning barriers for housing, and we will remove the barriers blocking the marketing of land for apartments. We've been working on this for two years."

"We're optimistic," tent protest organizer Dafni Leef told Channel 2 News ahead of Netanyahu's press conference.

Just before the press conference, the Knesset Finance Committee approved exempting the sale of apartments previously used for offices from the betterment tax through the end of 2013.

Knesset Finance Committee chairman MK Moshe Gafni (United Torah Judaism) slammed Netanyahu's remarks yesterday, saying that he is acting in panic. "I don’t like the prime minister to panic. The housing problem has existed for ten years, and needs a thorough solution, not something in response to demonstrations of one kind or another."

Netanyahu's emergency housing plan is in response to yesterday's protest marches that followed Saturday night's mass demonstration in Tel Aviv and the tent protests in several cities. During yesterday's protests, marchers carried placards saying, "The people demand social justice", "Bibi, Bibi, what have you done to me - the state has taken from me", "Bibi, wake up - the whole nation is in the streets", "Get off your balcony - the nation is collapsing", "Bibi, wake up - the nation is worth more", and "Capital, power, the underworld".

Netanyahu formulated the plan at last night's meeting with Minister of Finance Yuval Steinitz and Minister of Housing and Construction Ariel Atias, after a series of meeting at the Prime Minister's Bureau over the preceding week.

Published by Globes [online], Israel business news - - on July 26, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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