Gov’t Finds It Has More Land for Homes Than It Needs

Interior Ministry study says land for 506,000 units available for building rental units

Nir Keidar

Israel has land available to build more than 500,000 housing units on top of the estimated 120,000 to 150,000 units zoned for land in various stages of planning approval, according to a survey released by the Interior Ministry on Monday.

The survey was commissioned following a decision by the cabinet housing committee almost a year ago to move ahead with Finance Minister Yair Lapid’s plan to build 150,000 rental housing units as part of a drive to bring down the high cost of housing.

Instead, the committee found that appropriate reserves amounted to land to build 506,000 homes, three times the target. Of those, land for about 350,000 units has not yet been developed, while the remaining is in built-up areas that are either slated for urban renewal or are in aging industrial zones that could be converted to residential use.

The government has been struggling to contain the rise in home prices and this week unveiled guidelines for exempting some categories of buyers from value-added tax. The rental-housing plan aims to make tens of thousands of units available over the next decade for long-term rent by clearing bureaucratic obstacles to rapid construction.

In a sign of how much the market remains overheated, the Bank of Israel reported Monday that the value of new mortgages rose 3% since last year, to 3.95 billion shekels ($1.1 billion) in April. Although that was 9% less than the monthly average over the last year, April was still a busy month after discounting for the business days lost for the Passover holiday.

The Interior Ministry survey found that the largest reserves of land are in the central district, which includes the greater Tel Aviv area but not the city itself. Available land in the central district could accommodate 114,500 residential units, including 86,500 on undeveloped land.

Another 103,000 units could be built on land in the Haifa district, including 72,000 on undeveloped sites, and another 78,000 in the Jerusalem area, including 50,000 in underdeveloped areas, according to the survey.

By contrast, in the Tel Aviv district, where land for 62,000 housing units was found, most of them — 43,000 units — are on already built-up sites rather than open areas.

Guidelines for the survey were set by a team that included about a dozen government officials, most of whom are from the Interior Ministry’s planning commission or the Finance Ministry. The team convened four times in August and September to produce the survey guidelines.

The principles provided that only a portion of the land available for housing would be designated for rental units and that detailed plans would provide for a mix of types of housing.

The guidelines also called for 150,000 units to be made available within 10 years. Priority was to be given to high-density construction and the encouragement of mixed-use construction.

Binat Schwartz, the head of the Interior Ministry’s planning commission, is due to present the findings to the cabinet shortly. The survey was carried out by the architectural firm Gutman Assif, one of whose partners, Shamai Assif, is the former head of the planning commission.

In related news, a study by the real estate website Madlan found that five publicly traded property development companies were sitting on land zoned for some 20,000 homes, 7,000 of them on land that has already been cleared by authorities for building and the rest in various stages of planning.

Madlan based its information on the financial reports of the companies and only counted land that they have no plans to develop this year or next. But Amir Weinstein, one of the site’s principals, said he did not blame builders for not exploiting their land reserves.

“There are instances where property companies prefer to build gradually over several years to avoid hurting price levels in particular by massive building all at once,” he said. “Nevertheless, looking at the bigger picture, the lion’s share of the problem is actually the planning mechanism and decision-making process, which delays construction.”