Housing cabinet approves 150,000 rental apartments

Finance Minister Yair Lapid, who chairs the committee, said lowering housing prices was one of the biggest tests of his budget.

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May 23, 2013 23:09
3 minute read.
Loads of light in this Tel Aviv apartment.

home apartment light windows 521. (photo credit: Gloria Deutsch)

 
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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.

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“We are having a housing emergency that threatens an entire generation of young people who are afraid they will never have an apartment,” he said. “Similar projects around the world have proven their ability to change the reality of the housing market.”

The housing cabinet said it would examine ways to rezone existing land, ensure that entrepreneurs earn a fair return on their investment, make the bureaucratic process shorter and examine rent control and environmental protection.

It also budgeted NIS 5 million to fund a new professional housing committee staff that will include representatives from the various ministries active in the housing cabinet and which will be based at the Finance Ministry.

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

Bank of Israel Deputy Governor Karnit Flug on Thursday spoke about those barriers.



“The planning process in Israel is very long,” she 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.”

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

Interior Minister Gideon Sa’ar said it was important that the project not neglect the periphery, adding that housing reforms under the Kadima-led government had faltered over that point.

Despite such warnings, the government on Thursday canceled grants for home purchases in the periphery, prompting Labor MK Itzik Shmuli 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 and Water Minister Silvan Shalom urged action on the 12,000 “ghost apartments” in Tel Aviv and Jerusalem, saying they should be sold or rented out. Ghost apartments refer 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 central bank has other economic priorities to take into account, she said.

“The low interest rate supports activity in the market, particularly exports, public consumption and investment in industries,” Flug said, adding that higher interest rates would have strengthened upward pressure on the shekel in a time of low international rates, harmed exports, prevented growth and yielded higher unemployment.

Those factors would have led to a decline in the pace of housing construction, she said.

“We must increase the supply of homes,” Flug said. “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.”

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