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Finance Minister: Apartment Price Hike Dooms Next Generation

Finance Minister urges contractors in Monday afternoon speech to work with the government to lower real estate prices.
By Tova Dvorin
First Publish: 12/16/2013, 8:40 PM

Finance Minister Yair Lapid
Finance Minister Yair Lapid
Flash 90

Finance Minister Yair Lapid (Yesh Atid) spoke Monday afternoon to Israel's contractors, and appealed to them to assist the government in lowering apartment prices across the country. 

Lapid said that housing prices in Israel present a "strategic threat to an entire generation of young Israelis [. . .] and their parents" and  claimed that "this is the greatest challenge and the most difficult task facing us."

"Government policy - or rather, lack thereof - is the main culprit in the situation," he stated. Lapid, however, did not let private building companies off the hook. "But it is also the result of builders raising prices, or delaying construction so that prices will rise."

"We will fight this phenomenon with all of the combined forces of the Knesset Cabinet, and look for any way to avoid construction delays and push forward new building projects," he continued. 

Lapid also turned to the contractors themselves for help. "You too have a responsibility, and you should contribute to lower prices," he appealed. "Nobody expects you to lose money, but rather to change habits. We're going to sell much more in volume and much more aggressively, and we want you build much more and proceed more aggressively," he proposed.

"[The plan] is the alphabet of economics: there's a pay off for everyone - if you earn less on each unit, but sell much more, at the end you earn more," he enthused.

"I know you have simple obstacles, some of which are the result of years of erroneous government policy. If so, then we have to fix that together," he concluded.

CNBC recently noted that the real estate prices in Israel are building toward an unprecedented bubble, rising nearly 40% since 2009. Government officials have been scrambling to fix the housing crisis, which has left many young couples living with their parents or scraping by to pay inflated rent.

One solution has been to impose double property tax on empty apartments - an estimated 47,000 units - in order to discourage foreign vacationers from taking up much-needed rental space.