Government instability is holding back the promotion of thousands of apartments

Government instability is holding back the promotion of tenders for the construction of 11,000 apartments. This emerges from a letter sent by the Director General of the Ministry of Construction and Housing, Yair Pines, to the Director General of the Prime Minister’s Office and the Secretary of the Prime Minister, Tzachi Braverman, and the Deputy Prime Minister, Hod Betzer. Pines urged the proposal to grant grants and subsidize development. Reduced “As part of the housing program, the Minister of Construction and Housing, Yaakov Litzman, has a reduced price in tenders in the periphery for the government’s agenda.

Pines referred to a hearing held Tuesday at the Department of Justice, chaired by the Attorney General, which ultimately rejected the Department of Housing’s request to raise the decision for government approval. The ombudsman’s decision to reject our request was made on the grounds that due to the fact that the issue is horizontal, it is not possible to deviate from the accepted rules and allow a discussion … with respect to decisions that are not technical decisions. “At the same time, the ombudsman recognized the importance and urgency of the decision and the need to bring it before the government for approval,” Pines wrote.

The proposed resolution deals with increasing the economic viability of residential tenders in peripheral localities by providing incentives, which include a development subsidy for developers along with grants for apartment buyers. “Past experience shows that without the incentives provided, developers do not submit bids and tenders fail,” Pines wrote. “The proposal is a continuation of the actions that the government has taken in recent years, in order to enable the development of the periphery, through increasing the economics of real estate tenders,” he said.

This is a proposal that was coordinated between the professional bodies in the Ministry of Construction and Housing, the Israel Land Authority, the Ministry of Justice and the Ministry of Finance, prior to the announcement of the election, and there is even the approval of an election team in the Ministry of Justice. The director general of the Ministry of Housing added that “the critical need to approve the proposal regarding grants and development subsidies rests on the data we have been exposed to for a long time, indicating a decline in marketing data and construction starts, leading to a growing annual gap between housing units and demographic growth.”

“These trends are due to the existence of three election campaigns, which did not allow for significant decision-making, and against the background of the Corona epidemic which exacerbated the challenges in the industry and even diverted the housing market from the public agenda. “It was recently reported in the publications of the Central Bureau of Statistics and in the results of recent real estate auctions, which also indicate a future increase in prices.”

He added that “as long as immediate measures are not taken to support the construction industry, including increasing the success of marketing in the periphery, this trend will worsen – and we may face a reality of housing shortages and rising housing prices that will further burden households in Israel.”

Pines also stressed that “not bringing the proposal regarding grants and subsidizing development for government approval will directly hurt the increase in the supply of housing units. To illustrate the depth of the problem – in the absence of a valid decision, we will not be able to close tenders, which should close by February 1, 2011, including 1,800 housing units. We will be required to postpone the publication of tender brochures for more than 11,000 housing units, and there will be a significant delay in the publication of tens of thousands of units over the next two years. “

“Precisely during the Corona, at a time when the economic challenge is maintaining local production capacity, maintaining employment levels, and no less importantly maintaining the level of growth for the Israeli economy, the need to accelerate construction as an engine that will affect the rate of exit from the Corona crisis is sharpening,” Pines continued. “For the construction industry, and for the real estate market in general, a decisive impact on the growth trend of the economy and the reduction of the effects of the corona plague on economic activity. “Any decrease in the volume of marketing, beyond harming the increase in supply, means harming the state’s revenues from land marketing, direct and indirect taxes and the economic activity derived from the real estate market and the loss of jobs that are so vital these days.”

Therefore, Pines concluded that “a valid government decision is required, which will lead to support for the construction industry and the housing market in particular. This is from the perception of the real estate market as a generator of growth in the economy and given the data before us indicating an urgent need to accelerate construction. This urgent need is not only in order to meet the targets for increasing supply, but also, and perhaps most importantly, in view of the decisive impact of the real estate industry, precisely during the corona, on the economic growth of the Israeli economy. “

This week, Minister Litzman addressed Prime Minister Benjamin Netanyahu and Finance Minister Israel Katz with an urgent request to include the construction industry in the economic plan the two are promoting to deal with the corona crisis, and provide it with a budget of NIS 2.5 billion. “This is in order to prevent the housing market from deteriorating into a reality of crisis, which is accompanied by a shortage of apartments and a possible rise in housing prices,” Litzman wrote. “As Minister of Construction and Housing, the trust in the construction and housing sector in Israel, and in view of the data presented to me for a long time regarding the slowdown in housing supply in the face of growing demand and now data on housing prices published by the Central Bureau of Statistics, I fear the direction the housing market is heading.”

Litzman added that “a special budget should be included for accelerating construction by allowing housing barriers and supporting infrastructure. Since, without an immediate budget increase, we may face a shortage of apartments and rising housing prices, which will further burden the Israeli household economy. “A government to change these trends will push even further. As long as we do not intervene and these trends continue, they may lead to a situation in which the government will require a larger budget investment and adversely affect the state of the entire economy.”

As part of his request, Litzman detailed the budget needed to encourage the construction industry and allow housing barriers. These include budgetary investment in infrastructure projects in the fields of transportation, drainage and sewage treatment; Budgetary investment in classrooms and kindergarten; And another pulse to encourage buyers of apartments in the periphery (second-hand apartment grants).

“The current situation emphasizes the importance of meeting our budgetary demands, which will help in our efforts to prevent another crisis in the housing market and in all sub-circles of this market, or at least minimize the consequences that may occur in the coming years and affect every household in Israel,” Litzman added. “In the last month, this gap has begun to show in the results of recent real estate tenders issued by the Israel Land Authority and the Ministry of Construction and Housing, indicating a significant future increase in housing prices, as long as immediate steps are not taken to remove infrastructure barriers.”

He added that “this increase will join a trend that has already begun in the housing market, as can be seen in the latest publication of the Central Bureau of Statistics, according to which comparing transactions made in the current period compared to the same period last year, ie October 2020-November 2020, compared to October 2019-November 2019, prices Apartments rose by 3.2%. “