Kahlon: We'll extend Buyer Price program for two years

Moshe Kahlon  photo: Globes TV
Moshe Kahlon photo: Globes TV

The announcement is part of the psychological warfare waged by the Ministry of Finance in its effort to cool the housing market.

The "Buyer Price" program will continue to operate for the next two years, Minister of Finance Moshe Kahlon declared today at the Calcalist conference in Tel Aviv. "At the next meeting of the Israel Land Authority we shall extend the 'Buyer Price' program until the end of 2019," Kahlon said. Any extension to the program requires approval from the Israel Land Council (which sets policy for the Israel Land Authority) as set down in the rules of the original program, because of the extent of the loss to the state that it involves and the subsidy that it offers. Essentially, the program provides for the sale of land at below market price to the developer who offers the lowest price for the apartments to be built on it.

Kahlon's announcement of a two-year extension of the program surprised some in the real estate industry, who had thought that it would be extended for one year only. The announcement can be seen as part of the psychological warfare efforts of the Ministry of Finance and its housing department, which have grown louder in the past few months, and are aimed both at homebuyers and at building contractors.

For homebuyers, this latest announcement indicates to them that it worth their while waiting for reduced-price projects and for the coming lotteries to decide entitlement to them, that is, to continue sitting on the fence. For the contractors, the announcement signals that the supply of normal land tenders will continue to be low and that those who have not yet decided to participate in these tenders should take this into account.

Kahlon repeated past statements to the effect that in the end all those entitled to low-price housing would receive it. He also addressed the contractors, saying, "Contractors that don’t participate in 'Buyer Price' projects will simply cease to exist. At first, there were only five or ten companies, but now all the big companies are there." This highlights the situation that has arisen in the real estate sector as a result of the "Buyer Price" program. Nearly all land tenders are published in the framework of the government program, and contractors that do not participate in these tenders are left with very few possibilities in the free market.

The latest lottery for the "Buyer Price" program, now open, covers 11,500 housing units in several places in Israel.

Published by Globes [online], Israel business news - www.globes-online.com - on September 4, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Moshe Kahlon  photo: Globes TV
Moshe Kahlon photo: Globes TV
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