Housing Minister Uri Ariel has attacked the 0% VAT plan being pushed forward by the Ministry of Finance but admits it will help bring down prices. Speaking at the annual conference of the Institute of Certified Public Accountants he said, "The 0% VAT plan is an exemption that will never end. Only those without a home will benefit from the 0% VAT plan. In contrast the target price plan will also help those already with a home."
He continued that whereas the 0% VAT plan requires legislation the target price plan does not. "We mean to market large number of apartments in Modiin, Rosh Ha'ayin, and other places with between 15% and 20% discounts. That will influence the entire second hand market because a young person will be able to buy a first-hand apartment at a lower price and that will influence the prices of all apartments."
Ariel added, "Both plans will be working within a year and the target price plan is preferable."
Ariel expects the VAT plan to pass the Knesset within the next 20 days before the summer recess otherwise it will be put back until after the holidays.
Ariel pledged that in 2015 Israeli home prices will fall. "Both new and second hand apartment prices and rental prices will fall. The housing market like all markets is influenced by customers. It's not math and the trend is already for a fall and that will continue."
"Israel has never had a government that invested so much money in plans to bring down real estate prices. We have invested about NIS 6 billion in plans to bring down prices. There never was anything like it."
Ariel continued, "Every indicator is rising. Building starts, building permits, and marketing. There is nothing that is not rising. The problem is that we are in arrears by a decade because we did not plan ahead enough. When you don't plan you have nothing to market. I promised that planning would be cut to two years and we are doing what we know how to do to shorten planning procedures."
Published by Globes [online], Israel business news - www.globes-online.com - on July 7, 2014
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