"The basis for solving the housing shortage is new construction. Since it takes 15 years in Israel to promote and complete new construction, from planning to performance to occupancy, including seven years in planning committees, we have decided to deal with the chain of production. The Ministry of Finance is currently working at shortening this process. The Ministry of Finance is the general staff for housing, and we in the Ministry of Construction and Housing are the battering ram. We mustn't allow it to take so long to build an apartment, including planning, and we intend to make far-reaching changes in everything pertaining to regulation," Minister of Construction and Housing Yoav Galant said today at a conference of the Tel Aviv-Jaffa-Bat Yam Association of Contractors taking place in Eilat.
Asked how long it would take to deal with regulation, Galant answered, "Problems are created over years; you can't solve them in days. We're working on it."
Galant went on to talk about wage differentials and the housing shortage, saying that if things are left as they are, it would cause a recurrence of the social protest. "We can't be in a situation where you enter a 50-storey building in Tel Aviv in which the cleaner earns NIS 4,000 a month and the CEO on the 30th floor earns NIS 400,000 a month. I'm not envious, but when you're in a situation in which the income gap is 100 times or 150 times, the social conflagration sizzling among these people will burn these buildings down. Israel should spend money from its budget. This isn't a communist country; it’s a socialist country. It should take care of those below."
Galant continued, "First of all, we want to help those who have no apartments; that's why we introduced the buyer fixed price plan. For years, there has been an unacknowledged agreement between the Israel Land Authority (ILA) and the Ministry of Finance to maximize revenue from land. They used to market 200 housing units in one place, and then, when the prices rose, they would market 200 more. The state pushed up the price as much as possible. The prices reached scandalous proportions. That's how it worked. Now, with the buyer fixed price, we're changing this situation. We hope to restrain prices, and maybe later, we'll also lower them.
"At the same time, we also have to invest in two main centers in the south and the north of at least one million people. In the south, we're talking about Beer Sheva, where there's development, and we're also working in the framework of a roof agreement that has just been signed. In the north, I'm now trying to think how we can manage to do what hasn't been done for years - to bring people to the Galilee. If we found a big city on the basis of Afula, Upper Nazareth, and Migdal HaEmek, we can consolidate a metropolitan center in the north, too. It's being planned now."
"A shortage of 100,000 apartments"
Commenting on the real estate situation, Galant said, "When I took up my position, I found a situation in which 50% of the people in the country live between Gedera and Hadera. If you restrict it to the Jewish population, the proportion is about 60%. A city-state can't exist in the Middle East. We have security, geopolitical, and other needs. It also makes things expensive. It's true of the roads, too, because you need tunnels and bridges, and sewage and other infrastructure.
"Apartment prices have gone up 100% in the past eight years. In economic terms, we're nearing 200 monthly salaries to buy an apartment, compared with 100 20 years ago. Another point is that we'll need 50,000 new apartments in the next few years, and maybe even 60,000. We haven't built enough, and there's a gap of 100,000 apartments that has to be closed."
Galant also commented on the issue of public housing in Israel, saying, "Public housing is more a social than an economic issue. There were once 130,000 apartments, and now there are only 60,000. I also checked that out when I become minister. I learned that we've got hundreds of empty apartments around Israel. I asked why, and they told me that those eligible don't meet the criteria. They told me all sorts of stories, so we lowered the criteria, so that we could put people into the empty apartments. At the same time, we've got to buy more apartments - at least 1,000 apartments a year. We now have NIS 700 million for this purpose, but that's 700 apartments, and we're looking for more resources. In order to provide a solution for those in need, we need at least 1,000 apartments a year."
Published by Globes [online], Israel business news - www.globes-online.com - on October 22, 2015
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