Kahlon vows to break up Israel Lands Administration

By
January 12, 2015 21:23

Study finds housing less affordable than previously thought.




Moshe Kahlon

Moshe Kahlon. (photo credit:REUTERS)

Koolanu party leader Moshe Kahlon on Monday said he would only enter a governing coalition if he was given control of the Israel Lands Authority, which he promised to break apart in order to bring down the cost of housing.

“I am saying here, I will break up the Israel Lands Authority and any ministry I will be in will be responsible for the Authority, so that I will not be able to blame anyone for anything,” Kahlon said.

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Only in Cuba, North Korea and Israel did the state control such a large proportion of land, he joked.

Kahlon had previously hinted that he was eyeing the Construction Ministry for his party because the ILA falls under it jurisdiction, but Monday’s remarks seem to indicate that he would be willing to forgo the Construction portfolio as long as the ILA was under his control.

The thinking behind Kahlon’s plan is that if there were more entities competing to sell land, they would have to bid down the price for developers.

While economists agree that increasing the supply of land is key to making homes more affordable, not everyone is convinced breaking up the ILA is the best way to proceed.

“One of the downsides of that is that you lose scale and are creating a certain amount of inefficiencies,” said Steve Zecher, who co-authored a report on affordable housing at the Milken Innovation Center at the Jerusalem Institute. Having a few organizations trying to recreate the budget-neutral ILA model might end up creating expenses that outweighed the savings from competition, he said.

The ILA would not comment on Kahlon’s plan.

Israel dropped in several housing-related measures in the World Bank’s 2015 Ease of Doing business report, falling three places to 121st (out of 189) on a measure of construction permit bureaucracy and five places to 135th on a measure of registering property.

Meanwhile, housing may be even less affordable than previously thought, according to a study released Monday by Dr.

Danny Ben-Shahar, who heads Tel Aviv University’s Alrov Real Estate Research Institute.

While official statistics found that the average home cost the equivalent of 134 months salary at the end of 2012, Ben-Shahar said that cost was actually closer to 141 months salary.

The supply issue may be on the mend. According to the Bank of Israel’s latest monetary report, there were 44,200 building starts and 42,100 building completions in the previous 12 months, roughly on par with the number necessary to stabilize prices.

Asked why he left the Likud to pursue the agenda, Kahlon said it was because his former party had not focused enough on a social issues.

“I have no problem with the people in the Likud, I have a problem with their path. Eighty percent of the Likud faction meetings in the last few years were on topics of diplomatic issues and about settlements, and not on development towns and run-down neighborhoods,” he said. “Today’s Likud is not in the social place places I grew up in, [Menachem] Begin’s Likud.”
 

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