1. Ever since the government approved the National Housing Committees Law in March, many and various enemies have risen up against it: the Ministry of the Interior, which suddenly finds itself being bypassed; the local authorities, which for years have been used to controlling the regular planning committees and channeling them in the directions they wanted; environmental and planning organizations, which fear a flood of building permits at the expense of open land, and have been able to point to the unsuccessful neighborhoods that arose around the country the last time a similar law operated, under Ariel Sharon, when he was Minister of Housing Construction in the 1990s.
The opponents were many, but their voices were hardly heard. The public at large either did not know about or was not interested in the National Housing Committees. But then someone managed to rope in the crowd favorites, the tent protesters, to the campaign the ones for whose sake the "emergency program for accelerating residential construction," now called the National Housing Committees, was set up. The ones for whose sake the rights of Ministry of the Interior officials, city mayors, and green activists, were trampled underfoot, suddenly rose up against the law that was meant to be their savior.
The main argument of the tent dwellers is that the law has no sections concerning lowering of land prices or affordable housing, and so it is not clear how it will lead to cheaper homes.
Not even a basic course in economics is needed to be taken aback by their claims. It is perfectly obvious that if you flood a market, any market, with goods, prices will drop. A situation in which 100 buyers (contractors in this case) want to buy one piece of land is not the same as when those 100 contractors see 200 pieces of land for sale. In competitive conditions, not only will the price of land fall to a minimum, but the fierce competition afterwards for every home buyer will lead to a price war.
2. Ironically, this is the tragedy of the Housing Committees Law's opponents. On the final straight before approval in the Knesset, the law became enemy number one of the tent protesters, and the demand for it to be scrapped was the first that they presented to the prime minister which is precisely why it passed in the Knesset today almost without a hitch.
The greens, the local authorities, the regional committees, and the rest of the objectors, rejoiced at the boost they received from protest leader Dafni Leif, but with Leif's claims about the law sounding so feeble, no-one was left to listen to the original, and very sound, arguments against the National Housing Committees.
So we are left with the biggest problem, that even in the institution that is supposed to be the most orderly and structured, they have formed a habit of jumping from one makeshift provision to another. Instead of fixing the sick system, they hurriedly invent a temporary one, that will last a year of two.
Instead of rehabilitating the permanent system, and putting forward a properly thought through program for the slow, capital intensive real estate market, a program that will guide planning and marketing for a decade or two ahead; instead of taking on more construction plan examiners, engineers, lawyers, and other professionals for the regular planning committees; instead of finally approving the most obviously needed reform in the planning and construction laws; the state will pluck the talented people who sit here and there on those regular committees to reinforce the special committees being set up as a temporary provision, so that the ailing permanent system will weaken some more.
3. It's hard to see how, in practice, the National Housing Committees will flood the country with construction projects and tens of thousands of new homes. In Sharon's day, there really were cranes everywhere. In the period 1991-1992, construction was started on129,540 apartments in Israel, twice as many as have been built in the past two years.
Only then, the planes were bringing in hundreds of immigrants daily, tens of thousands of portable dwellings were scattered around all over the country, and the housing shortage was visible to all. As demand and prices rose, the construction industry joined the party.
In August 2011, however, no-one really lives on the streets. The contractors are already stuck with plots of land in which they not sure that it is worthwhile investing tens of millions to build housing projects, and the system that is supposed to provide finance for the whole enterprise the banks and the capital market already have a foot on the brakes as far as the local residential market is concerned. As demand and prices fall, the industry players start leaving the party. Even the "tycoons," whom the tent protesters fear will take over all the land in the country, have for months been reluctant to buy land in Israel. What's more, the tycoons too (Ilan Ben-Dov, Yitzhak Tshuva) are in need of money from the banks.
Published by Globes [online], Israel business news - www.globes-online.com - on August 3,