PM Vows to Lower Home Prices

Netanyahu: 'Unoccupied property owned by foreigners is a problem'.

Prime Minister Benjamin Netanyahu yesterday vowed action to lower housing prices in Israel, after years of steep increases. One action being contemplated, which will be brought before the cabinet on Sunday, involves a break on betterment tax for people who sell land for housing development during 2011, if they bought the land before 2000.

The prime minister described the steps his government is taking to make housing more affordable, most notably for young couples seeking to buy their first homes. Following Netanyahu's address, Finance Minister Yuval Steinitz presented three practical proposals to help lower prices in the short term.

Tomer Appelbaum

Netanyahu said his government had initiated three main steps to lower prices in the long term to solve the land-supply problem for new housing. These included reforms at the Israel Lands Administration to increase the supply of land available, upgrading transportation between the center of the country and the periphery, and reforms in the planning and building laws - presently under review in the Knesset.

Reform of the law can speed up the planning process and the issue of building permits, the prime minister explained.

"I have decided that results must be achieved and this is the first wave," Netanyahu told a press conference.

Before the briefing, Netanyahu met with Steinitz, Housing and Construction Minister Ariel Atias and the governor of the Bank of Israel, Stanley Fischer, who has also spearheaded a number of macroprudential moves aimed at lowering housing prices, by discouraging purchases for investment purposes - through jacking up the cost of big mortgages.

Steinitz and Atias were also at yesterday's press conference.

"When I was finance minister I would offer solutions until the public and the market got used to the idea that a systematic effort was being made. We meet every week and if necessary we will present further steps," said Netanyahu.

"In the past five years we have seen a sharp rise in housing prices. We know this is a burden for the entire population, but first and foremost for young couples. The step of buying a first home as people start their lives together has become more and more difficult. They find temporary solutions and there is a growing housing shortage in Israel."

Netanyahu said the government had done two things in the past year to ease the housing problem in the short term. "We canceled the ban on planning and construction in the center of the country that had been adopted by the previous government," he said. "That's how we are opening possibilities in the center of the country as well." The ban had worsened the housing-price problem in prime areas, he explained. "We also increased the supply of land to almost double the average of 15,000 [housing units] a year over the past decade."

He said the steps were important, but not enough. A great systematic effort was needed to solve the problem.

Residences owned by foreigners that remain unoccupied most of the year are another issue Netanyahu said he had discussed with Fischer and Atias, but he refused to give details of his plans on the matter.

"It's possible to stop the jump in housing prices," he said.

Atias said the source of the problem was a shortage of land marketed by the state over the past decade. He said there was a need to give incentives and benefits to young couples looking to buy their first homes, and hoped the treasury would look favorably on their situation.