Needed: A new housing policy

These programs must all become part of a broader, macro-level housing policy with clear, quantitative goals.

By
December 29, 2015 20:45
3 minute read.
palestinian laborers

Palestinian laborers work at a construction site in a settlement near Jerusalem . (photo credit: REUTERS)

 
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The Jewish Agency, in conjunction with the Finance Ministry and the Construction and Housing Ministry, this week launched an ambitious project to help provide subsidized housing for Israel’s most vulnerable citizens, particularly the elderly.

A total of 2,650 housing units will be constructed between 2019 and 2021 at a cost of some NIS 530 million.

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In addition, the state will subsidize rents for 20 years at a cost of another almost NIS 1 billion. The building projects will be managed by Amigour, a non-profit subsidiary of the Jewish Agency that is Israel’s leading sheltered housing company and the second-largest public housing group.

Eligibility will be determined according to criteria set by the Construction and Housing Ministry and the Absorption Ministry.

This is precisely the sort of building project that the government should be initiating to tackle Israel’s chronic housing shortage. However, beyond this specific project, what Israel is desperately in need of is a clearly articulated, overarching housing policy with precisely defined objectives.

At least since the socioeconomic demonstrations during the summer of 2011, Israel’s pressing housing shortage has received a high level of public attention. After decades during which the state gradually retreated from the housing sector and allowed market forces to govern supply and demand, the tide has gradually turned. We are seeing more state intervention like the project announced this week by Jewish Agency chairman Natan Sharansky, Construction and Housing Minister Yoav Galant and Finance Minister Moshe Kahlon.

As part of the coalition agreement, Kahlon concentrated a large degree of power over housing in his own hands and in the hands of Galant. Avigdor Yitzhaki, the chairman of the housing cabinet, is pushing for an increase in construction via urban renewal projects and more lowpriced rental housing.

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However, neither Kahlon, Galant, nor Yitzhaki has articulated a coherent housing policy with goals and objectives. Tens of thousands of Israelis are unable to afford housing. The government has an obligation to take steps to provide citizens with this most basic need.

Despite all the efforts by this government and previous ones, there is still a housing shortage. Coupled with low mortgage rates, the shortage is pushing prices up. According to a survey published this week by credit rating agency S&P, housing prices are expected to continue to rise in 2016 and 2017, albeit at a slower rate than 2015, during which prices climbed more than 5 percent on average.

In 2016 prices are expected to climb 3.5% and in 2017 by 2.5%.

The problem remains the same: New families are being formed faster than new homes are being built. While 50,000 new dwellings will be built this year and next, this will unlikely be sufficient to make up for the deficit in supply that has built up over the past decade.

The government will have no choice but to more aggressively intervene to provide subsidized rental housing for the more vulnerable segments of society, particularly in outlying areas in the North and South. More public housing projects like the one launched this week by the Jewish Agency together with the government are invaluable for helping to increase supply and thus lower prices.

But these programs must all become part of a broader, macro-level housing policy with clear, quantitative goals.

Optimal housing prices should be set in each area of the nation. The optimal number of dwellings that will be built in each area should also be set, as should the number of housing units that will be made available for subsidized housing, and a time schedule for the attainment of these goals should be provided.

For too long now consecutive governments have promised to bring down housing prices, yet there has been no discernible decline. The Jewish Agency’s program announced this week is a step in the right direction. But this program and other steps being taken by the government should be part of a broader housing policy that will provide housing for the most vulnerable among us and bring down prices to more affordable levels for everyone else.

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