Minister of Finance Yuval Steinitz is trying to stymie Minister of Housing and Construction Ariel Atias's plans to subsidize mortgages in the periphery. The ministerial legislative committee recently approved the measure. Steinitz will appeal the bill at next Sunday's cabinet meeting.
Atias's bill was approved after Prime Minister Benjamin Netanyahu decided to support it in order to gain Shas's support for the biennial budget law for 2011-12.
The Ministry of Housing and Construction will subsidize mortgages for young couples in the periphery buying a first home in an apartment building. The bills stipulate that the Ministry of Housing and Construction will provide a subsidy of NIS 800 a month for mortgages of up to NIS 140,000 in National Priority A areas, and a monthly subsidy of NIS 475 for mortgages of up to NIS 90,000 in National Priority B areas.
The Ministry of Finance has always opposed mortgage subsidies, on the grounds that they will boost housing demand and cause home prices to rise sharply. Atias says that the ministry's arguments are wrong, because housing demand in periphery is flexible and because the Israel Land Administration is releasing large amounts of land to boost the housing supply, which will lower prices.
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2011
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