In the government's latest bid to reduce housing costs, Finance Minister Yair Lapid has approved the allocation of billions of shekels for the construction of rental apartments and other projects that will make homes more affordable, Housing Minister Uri Ariel said Sunday. Although the final amount and uses of the money have not yet been finalized, Ariel said that the deal would be finalized this week.
Besides apartments, said Uriel, the money will be used for things like highway construction, infrastructure development, road works, parks and other amenities and other things that will encourage development and construction of the rental units. Ministers responsible for those areas are, along with Ariel and Lapid, members of a special government committee on housing issues.
The Finance Ministry has not commented on the matter.
Housing prices in Israel have been high for several years, making the purchase of apartments difficult for many families, especially young couples. Insufficient housing stocks due to a lack of construction of median-priced housing has been cited by experts as a major cause for the shortage; for nearly a decade, much of the construction in large cities has been for the luxury market, creating a shortage in the median market, essentially pricing out many Israelis from formerly-affordable neighborhoods. Adding to the price pressure is that Israel has no rental options other than the private market, where units are difficult to find in large cities, creating pricing pressure on the rental market too.
In previous statements, Lapid has said that he wants to see the construction of as many as 150,000 rental units throughout Israel over the next decade. According to reports, that plan will take a solid form this week as Lapid pushes forward a plan to establish a government corporation to build and manage apartments. The corporation will establish joint efforts with contractors, and market rental apartments in a variety of projects.
Ministers on a special government housing committee are expected to approve formation of the government corporation as early as Sunday night, government sources said.
But Ohad Danos, chairman of the Israel Land Appraiser's Association, expressed doubt that the plan would succeed.
“This is a waste of taxpayer's money,” he said. “The ministers do not realize that you build apartments with actions, not words. There is no economic incentive for builders to construct 150,000 rental units, so it will not happen.”