PM: Gov't taking steps to decrease housing prices

Gov't passes Trajtenberg C'tee recommendations on housing, initiating plan to build 187,000 units in next 5 years.

Netanyahu cabinet meeting 390 (photo credit: Marc Israel Sellem)
Netanyahu cabinet meeting 390
(photo credit: Marc Israel Sellem)
The cabinet on Sunday unanimously passed an amended version of the Trajtenberg Report’s housing recommendations, which Prime Minister Binyamin Netanyahu said would lower prices and increase the availability of apartments.
This means the government has now approved all four chapters from the report – which the Trajtenberg Committee on Socioeconomic Change issued in response to last summer’s protests over the cost of living. The other three chapters dealt with taxation, competition and social services.
Subject to Knesset approval, the Israel Lands Authority will market 187,000 new apartments throughout the country over the next five years. Sixty percent will be located in the high-demand areas of Tel Aviv, Jerusalem and the central region; 40,000 will be designated for affordable housing.
“The more apartments there are, the greater will be the pressure to lower apartment prices,” Netanyahu said at the start of the weekly cabinet meeting.
“This is what the cabinet was dealing with even before this report was presented and adopted, and continues to do so after it.”
Opposition MKs including Nahman Shai (Kadima) slammed the prime minister for removing “earning power” from the housing criteria in order to win coalition partner Israel Beiteinu’s support. “Without this criterion, the government turns the Trajtenberg Report into a laughing stock,” Shai said.
Kadima MK Yoel Hasson said the approval of the report would not lower the price of buying or renting an apartment for many years, if at all.
“It will be like the rest of the report, which has not lowered the cost of living in Israel,” Hasson said. “Since the socioeconomic protests, the public has not felt any positive change in the government’s policies. Things have only gotten worse. Netanyahu is trying to trick the public into thinking things will be cheaper here. I don’t buy it and the public definitely won’t.”
Habayit Hayehudi chairman Daniel Herschkowitz attacked Shas and Israel Beiteinu for reaching compromises that would not require people to work for a living to be eligible for housing benefits.
“They care only about their constituencies, not whether the working public will be able to afford an apartment,” he said.
Among the other reforms approved on Sunday, maximum assistance for renters who are eligible for public housing will rise from NIS 1,750 to NIS 3,000 per month – at a cost to the state of NIS 800 million over five years.
The property tax (arnona) ceiling for apartments that stand empty for more than half a year will be doubled, with the aim of releasing more than 15,000 apartments into the housing market each year.
Apartments deemed unfit for habitation will be eligible for a tax-exempt status for nine months, after which the doubled property tax will be levied.
Levies of up to 10% of the price of the apartments will be imposed on contractors who win tenders but do not complete construction projects within two years of receipt of the building permit.
In addition, the government approved an NIS 1.5 billion housing package for new immigrants. The package includes monthly rental assistance of up to NIS 1,250 per family, monthly rental assistance of about NIS 3,000 for wheelchair-bound new immigrants, and increased housing assistance for elderly immigrants.
New-immigrant status will be recognized for 15 years from date of aliya, an increase from the current 10 years.
The Association of Contractors and Builders criticized the reforms in a letter to cabinet ministers on Friday, claiming they would cause home prices to rise 10%. The association said the reforms would impose a heavy cost on developers who own land on which construction has not yet begun – in contrast to the goal of speeding up construction and reducing prices.
“We are dealing with a credit crunch in real estate and small businesses,” the letter said.
“Levying a new tax will increase the number of loans that contractors must take to finance construction, worsening the credit crunch and resulting in a halt in housing starts.”
An amended version of the Trajtenberg Report’s chapter on taxation came into effect on January 1, increasing the rate of income tax for high- and middle-income earners, granting tax credits to fathers of children under three years old, and granting a second tax credit to mothers of children under 18.
Gil Hoffman contributed to this report.