Histadrut head: Stanley Fischer hurt young couples

"Governor of the Bank of Israel Prof. Stanley Fischer is trying to lower apartment prices, but his tools are inadequate, and meanwhile he has twice hurt young couples (by raising the interest rate and tightening mortgage lending terms for banks), and has only helped the banks and the Ministry of Finance," said Histadrut chairman Ofer Eini at the "Globes" Israel Business Conference 2010 yesterday.
Eini reiterated his call for the cabinet to hold a round-table discussion on home prices with the Histadrut (General Federation of Labor in Israel) and employers. "Young couples can't buy an apartment today without help from their parents," he said.

Eini has allied himself with businesses, including contractors. He hinted that the government should increase the quota of foreign workers in the construction industry in order to shorten construction times for new homes, which would lower prices.

Supervisor of Banks Rony Hizkiyahu noted the risks to banks in the real estate market. "The risk from the mortgage market worries us. Prices have risen and risen, but we're dealing with this. Real estate is cyclical, and it's a long cycle. The risk is that projects started now may face no demand when they're completed, and contractors will be stuck with apartments. This happened to us in 2002, and we ended up with a stagnant real estate market for years."

Hizkiyahu's comments imply that he is not happy about remarks that the housing supply should be greatly expanded in order to cut prices, because this is liable to harm contractors and the banks.

Hizkiyahu noted that, besides the mortgage market, the banks are exposed to other risks, especially in their foreign investments. He said that the banks should carefully examine whether the foreign institutions they've invested in are sound. He added that exporters were also at risk.

Hizkiyahu welcomed his successor David Zaken and praised the employees of the Banking Supervision Department. "They are responsible for us having a good banking system. They work at very high standards compared with the world, and there are a lot of countries that would like to change places with us with regard to banking supervision.