Housing cabinet to add 150,000 rental apartments

Newly formed cabinet sets deadline to submit plan for building 150,000 new apartment units within the next decade.

By
May 23, 2013 20:36
3 minute read.
MERETZ ACTIVISTS led by MK Ilan Gilon (second left) protest for public housing in Jerusalem

Meretz public housing protest 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

The newly-formed housing cabinet met Wednesday evening and set a 90-day deadline to submit a plan for building 150,000 new apartment units within the next decade.

Finance Minister Yair Lapid, who chairs the committee, said lowering housing prices was one of the biggest tests of his budget. "We having a housing emergency that threatens an entire generation of young people who are afraid they will never have an apartment," he said.

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"Similar projects around the world have proven their ability to change the reality of the housing market." The Housing Cabinet said that in shaping the plan, it would examine ways to open up new supply, rezoning existing land, ensuring that entrepreneurs keep a fair return on their investment, making the bureaucratic process shorter, examining rent control and environmental protection.

It also budgeted NIS 5m. to fund a new professional housing staff committee, to be housed at the Ministry of Finance and include representatives from the various ministries active in the Housing Cabinet.

Housing Minister Uri Ariel declared his intention to create a national headquarters to ease the burden on ministries and help bring down barriers in the way of housing starts.

Speaking on Thursday, Bank of Israel Deputy Governor Karnit Flug laid out the extent of those barriers.

“The planning process in Israel is very long,” Flug said. “From the time a decision is made until the completion of construction, the process takes almost 13 years. It seems that while the bottleneck at the end of the last decade was at the planning stage, today, following the completion of planning for 60,000 units in 2012, the bottleneck is now at the stage of obtaining permits, meaning the Local Committees, due among other things to limitations in the construction of the infrastructure to support residential neighborhoods.”

The biggest complaints from construction businesses, she added, were in obtaining permits and approvals and a lack of available land for construction despite relatively moderate credit limitations.

Interior Minister Gideon Sa'ar emphasized the importance of the project not skipping over the periphery, saying that housing reforms under the Kadima-led government faltered over that point.

Despite such warnings, the government on Thursday canceled grants for home purchases in the periphery, prompting Labor Mk Itzik Shmuly to call for an emergency meeting. The government, he said, had provided slogans on the issue, but "is striking another blow on the heads of young couples, distancing them from their dream to build their homes in Israel." On Wednesday, Energy Minister Silvan Shalom urged action on the 12,000 "ghost apartments" in Tel Aviv and Jerusalem, saying that they should be sold or rented out. “Ghost apartments” refers to units that remain vacant most of the time, often because their owners live abroad and use them only sparingly.

Following three months of steady declines in housing transactions, a Thursday report from the finance ministry found that in March, they remained steady. The good news was that level of investors fell to 21%, the lowest in recent years, meaning that most of the housing transactions were for actual renters or home-owners.

Flug defended the Bank of Israel’s low interest rates, which exacerbated the housing price increases of recent years in part by incentivizing such investors. The Bank, Flug noted, has other economic priorities to take into account.

“The low interest rate supports activity in the market, particularly exports, public consumption and investment in industries,” she said, noting that higher interest rate, would have strengthened upward pressure on the shekel in a time of low international rates, harming exports, prevented growth, and yielded higher unemployment. Those factors, she argues, would have led to a decline in the pace of housing construction.

“We must increase the supply of homes. For that purpose, the government must take steps to increase the amount of available land for construction, shorten the time from the project’s initiation to the actual start of building, and synchronize building plans with infrastructure development,” she concluded.


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