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The cost of housing in Israel will soar because of the steep increase in the price of iron on world markets, warned builders yesterday, leading the Knesset Economics Committee to call on the treasury to abolish the levy on iron imports.

The cost of a 100-square meter apartment will increase by NIS 30,000 because of the 50% increase in the price of iron, predicted Yossi Gordon, chairman of the Association of Contractors and Builders in Israel yesterday. Speaking to the Knesset Economics Committee, which was discussing the hike in iron prices, Gordon warned that the present price indexes are not reflecting the real increase in costs, and added that the entire construction sector faces a crisis.

"We call on the Knesset to help us weather the crisis," said the association president's president, Nissim Boblil.

"The government cannot continue to ignore the wave of price hikes sweeping through the economy," stated Economics Committee chairman Gilad Erdan. The panel members called on the treasury to fight the trend by immediately lifting the 10% levy on iron imports.

Another suggestion the committee raised was for the Finance Ministry to issue a standard contract between the state and housing developers, linking prices to the sub-indexes reflecting the real increase in construction inputs.

The builders' representatives pointed to the case of construction company Danya Cebus, which lost NIS 146 million on building Highway 431 directly because of the spike in iron prices and the flaws in the linkage system.