Daily Israel Report

Katz: Construction Resumption Will Allay Housing Crisis

PM Netanyahu has plan to save the rising housing market. Housing experts say it won't work; MK Yaakov Katz says the ongoing freeze makes it worse.
By Hillel Fendel
First Publish: 11/15/2010, 10:42 PM / Last Update: 11/15/2010, 10:33 PM

Flash 90

Prime Minister Binyamin Netanyahu has a plan to save the rising housing market from itself, but housing experts, including MK Yaakov Katz, say it won't work.

Katz (Ketzaleh), a former Housing Minister Director-General (under one-time Housing Minister Ariel Sharon) who now heads the National Union party, said on Monday evening that Netanyahu's plan does not deal with the underlying causes of the drastic rise in housing prices – most importantly, the freeze in Jewish construction in Jerusalem, Judea and Samaria.

At a press conference with Finance Minister Yuval Steinitz and Housing Minister Ariel Attias on Monday, Netanyahu announced a series of steps they hope will make it easier for builders to build, and for young couples to purchase, apartments.

Netanyahu's plan includes these three steps: 

** A 15% discount on the purchase of land in Israel Land Administration tender – on condition that the builders complete at least 80% of the apartments in the project in 30 months or less.

** A cut in the real estate capital gains tax from 45% to 20%, during the year 2011. It is also contingent upon completion of the project within 30 months.

** Enabling local municipal authorities to collect directly development levies from builders for public institutions, thus removing a major bureaucratic obstacle blocking construction permits and housing projects.

The first and third steps are changes that can be made by the Finance and Housing Ministers, but the second one must be enacted via Knesset law.

Ketzaleh's response to the plan was this:

"Netanyahu's three magic solutions won't work as long as three wrong policies remain in effect. First is the entry of tens of thousands of infiltrators from Africa who take up some 5,000 units each year in Tel Aviv, Eilat, Arad and elsewhere. Second is the significant lack of construction workers, in light of the removal by the Netanyahu government of the foreign workers from the construction field; there is simply no one to do the building.

"Finally, there is a shortage of housing units because of the ongoing orders given by the Prime Minister for close to two years for a freeze on construction in our capital city and environs – Judea and Samaria – where a fifth of the country's population lives, and whose population grows at a rate double that of the rest of the country.

"After these three problems are dealt with, there will have to be government construction of 100,000 units within two years, as the Shamir Government did when Soviet Jewry began arriving. This is the only way to save the young couples and the homeless."

Nissan Boublil, head of the Builders Association, said in response to the Prime Minister's plan: "I congratulate Netanyahu for finally taking time to deal with the real estate problem. His ideas of reducing the capital gains tax and of helping the municipalities are in the right direction. But to grant a 15% discount on the price of land to contractors who finish building within 2.5 years is not practical; they can't finish that quickly… Netanyahu has not yet provided an answer regarding the grave shortage of professional workers, which means that we have no way of speeding up the times."

Erez Cohen, head of the Land Appraisers Association, said, "This plan is less than an aspirin. The real estate market has been in total chaos for two years, and this plan will just make it worse in that it will create false hopes that will not pan out. It only barely touches the edge of the market, and will not actually increase the number of apartments."