Housing crunch could lead to coalition crisis, Attias says

Government’s failure to address housing crunch through biennial budget could lead to coalition crisis, members of Knesset Finance Committee say.

Ramat Yishai 311 (photo credit: Courtesy)
Ramat Yishai 311
(photo credit: Courtesy)
The government’s failure to address the housing crunch through the biennial budget could lead to a coalition crisis, members of the Knesset Finance Committee said Tuesday.
“The issue of housing is the central issue on the Knesset’s agenda,” Finance Committee chairman Moshe Gafni (United Torah Judaism) said at a hearing with Construction and Housing Minister Ariel Attias (Shas). “Housing is a critical topic that could create a real coalition crisis.”
“The Israel Lands Authority has turned into the biggest land speculator in the country,” he said, adding that this was a key factor in the rise in housing prices.
Attias told the committee housing prices had risen 40.9 percent over the past two years.
He said he was working to change the trend, but “Shas has only two votes in the Ministerial Committee for Legislation and Likud has 11, so I hope that they will support the bill that is designed to advance incentives in the housing market and to encourage new building projects.”
MK Miri Regev (Likud), chairwoman of the Knesset Lobby for Affordable Housing, said the problem was that the Finance Ministry is interested in making money from state-owned lands. But she also attacked Attias, saying he was addressing the housing problem selectively.
“We all know Shas’s significance in the coalition, and if Shas really wants to, all of its proposals to solve the housing crisis will be promoted,” Regev said.
After directing barbs at Attias, she was removed from the hearing.
Attias said the budget had stripped funding for subsidized mortgages. A budgetary analysis presented by the Knesset’s Research and Information Department supported his claim. The report showed that the budget for mortgage assistance had declined 79% from NIS 5.7 billion in 2002 to NIS 1.2b. in 2010.
Attias said the state “earns money from those who are entitled to subsidized mortgages, because the interest that is offered is fixed at 4%, while the interests offered at banks were much lower. The Treasury receives the differences between the interests from the banks.”
MK Tzion Pinyan (Likud) accused the ILA of “creating obstacles and delaying steps” that could be taken to solve the crisis, such as apportioning more of its lands for building housing.
MK Yoel Hasson (Kadima) accused the ILA of releasing only limited parcels to inflate land prices and put more money into state coffers. An additional obstacle was a lack of high-rise buildings, he said.
Local government officials complained that the 2011-2012 budget would strip funding for rehabilitating already existing neighborhoods. Representatives of the Druse and Circassian communities said their funding had been severely reduced.
“If there is a reduction in the budget for building in the Druse sector, it will be hard to pass this budget at all,” Gafni said. “As chairman of this committee, I can’t approve a budget if I don’t know what is happening to the Druse sector. I know what it means to discriminate against a minority.”
Bank of Israel Governor Stanley Fischer, at the annual conference of the Banking Association in Tel Aviv on Tuesday, said the central bank would further intervene in the housing market to tighten conditions on mortgages, should the measures announced by the government and the central bank in recent months fail to cool down property prices.
“At the moment there are signs...that the housing market is stabilizing,” he said. “But there are conflicting data from different sources... and we need to wait for a clearer picture. If we see that housing prices are continuing to rise at a fast pace, we will need to implement additional macroprudential measures.”
Sharon Wrobel contributed to this report.