Home price rise not our fault, Netanyahu claims

The prime minister: The bureaucracy is stifling; Yachimovich: How long can you blame your predecesors?

Prime Minister Benjamin Netanyahu was required to comment in the Knesset today on the housing crisis following the signature of 40 members of Knesset on a motion initiated by MK Itzik Shmuli (Labor) demanding his response.

"In the past few months we have published construction tenders for thousands of housing units in Judea and Samaria," Netanyahu said at the beginning of his remarks. "It wasn't easy to do, but we did it sensibly and responsibly. We withstood pressures from the international community." Netanyahu implied criticism of Minister of Construction and Housing Uri Ariel's plan to build more than 20,000 housing units in Judea and Samaria in saying, "There is no point in more impractical steps demonstrating theoretical potential for construction. Especially at this time there is no point in wasting resources, energy, and precious political capital on something that will have no practical outcome."

After this, Netanyahu read out from data published by the Central Bureau of Statistics: "From 2000 to 2008, prices rose moderately. From 2008 there was a sudden sharp rise. By 2010, prices rose by nearly 40% on average. From 2010 to today prices have risen 5.6%. There was a sudden sharp rise that then moderated."

It should be pointed out that, according to the Central Bureau of Statistics' Home Prices Index, home prices have soared by more than 80% since mid-2007, when the great wave of price rises began.

Netanyahu, who for years has been trying to push through reform of the Israel Lands Administration, which failed even after it gained final approval in 2011, spoke again today of the "inefficient government monopoly that holds 93% of the land."

Netanyahu listed the measures his government had introduced in the housing market in the past few years. "We increased the supply of housing by 25,000 units thanks to the immense work of the ministers in the last government," he said, "but eventually we are going to increase the stock of planned housing. Here we encounter something that has no peer anywhere in the world: our planning laws. You start in the national committee, then go to the regional committee, and back again in unending loops and circles like a coiled snake, and finally, after years of these tribulations, maybe there will be permits. There's nothing like it in the world. The bureaucracy here is stifling."

Netanyahu said that his bill to reform planning and building regulations had been delayed because of the elections. "Now, the law is being submitted again. We can do a lot of things. Prices have risen 40%, but we want them to fall. If you really want this change, then the simplest immediate, practical step you can take is to pass this law."

Netanyahu placed hope in the evacuation of army bases in central Israel, saying, "We are taking giant steps towards taking the largest bases out of high demand areas and making bold moves as with Israel Military Industries. This will bring in billions for the state, and will release reserves of land in high demand areas. The second thing is to promote ideas. I think that there are some very interesting ideas here."

Immediately after Netanyahu, leader of the opposition Shelly Yachimovich rose to speak. "You have been prime minister for five years," she said to Netanyahu, "Till when can you blame your predecessors? There's a limit.

"In your previous government you promised dramatic reform that would bring down home prices significantly. Five years later, these are the facts. In 2013, it takes 135 monthly salaries to buy an apartment. Twelve years of work. That's a fictitious statistic, because you have to buy food as well. This week, we started to receive figures from the Central Bureau of Statistics according to which half the workers in the economy earn less than NIS 6,000 monthly, making it 200 monthly salaries for an average person to buy an apartment. You continued making promises. In an ostentatious press conference after the social protest you said, 'I saw the protest coming when I was minister of finance. These are dramatic changes, we will accomplish massive changes through legislation.'"

Yachimovich continued, "People in their late thirties say, 'When my grandmother dies perhaps we'll sell her apartment and divide up the proceeds. It's heartrending, but that's the only chance for them to see the beginnings of the prospect of a home."

"You promised a supertanker to cool housing prices, and not even a kite has turned up," said Shmuli at the opening of the Knesset debate. "These days, an average apartment costs NIS 1.3 million. This week, I received a letter from a young couple in Petah Tikva, and this is what they write: 'They lied to us. We thought our time had come to start living a little here, but the mortgage bank thought otherwise and wouldn't grant us a mortgage. The state calls people like us "the salt of the earth" at ceremonies, but at other times we're "populists". How come everything is so good in this country and for us, from the economic point of view, it's mostly bad? We're not crybabies. We've both worked since we were at university, and every month we once more rack our brains over how to pay the rent and the bills without making an embarrassing phone call to our parents to ask for help again. We're at a standstill, but people like us are forgotten in this country'."

Shmuli continued by attacking Netanyahu: "You say you have a plan for reducing prices, but it's not true. The truth must be told. 50% of the cost of a new home in Israel goes to the state. In 2011, the state collected over NIS 8 billion from the sale of land for residential construction. How is it that land prices have shot up by 500% in Tel Aviv and 400% in Jerusalem on your watch?"

Published by Globes [online], Israel business news - www.globes-online.com - on November 13, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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