Central Bureau of Statistics data showing that housing prices in Israel rose 13 percent last year shocked the government. This steep rise in housing prices showed that all the efforts the government has made to date to rein in price increases, first and foremost by increasing the amount of land marketed for residential construction – enough for 63,000 homes in 2021, a peak that hasn’t been hit for a quarter of a century – haven’t helped. The public, fed up with promises, no longer believes the government and is convinced that anyone who doesn’t buy an apartment today will regret it tomorrow.
This inflation of housing prices is harming almost every segment of society, and especially the younger generation. In this situation, any chance of a young man or woman from the middle class managing to buy an apartment seems like a distant dream. For them, this means starting their lives without even minimal economic security.
The public’s lack of faith stems from almost three years of paralysis on the government’s part. This, among other things, is the price of former Prime Minister Benjamin Netanyahu’s campaign to escape the arms of the law. As part of this campaign, he dragged the entire country into four elections, one after the other, over the course of less than two years. But it’s no longer possible to cast all the blame on the failed Netanyahu governments. From now on, the responsibility rests with the “government of change” headed by Prime Minister Naftali Bennett and Foreign Minister Yair Lapid. It must focus all its attention on a solution to the housing crisis.
Such a solution seemed to be on the horizon in 2018-2019, with the adoption of former Finance Minister Moshe Kahlon’s “Mechir Lemishtaken” program.
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Kahlon not only drafted a daring plan, but above all, he wanted to rein in housing prices with all his might. Kahlon genuinely cared about this. The issue was important to him, and therefore, the public trusted him.
The current government must prove that this issue is no less important to it than it was to Kahlon. It must continue to increase the supply of homes, free up land and work to remove barriers that hinder construction. To this end, it must reach agreements with local municipalities that currently oppose construction within their jurisdictions. In addition, the government must convince the Bank of Israel to lend a hand by putting restrictions on mortgages to curb demand for them.
There’s no room for panic or hasty decisions like having the government dictate the asking price for all the Israel Lands Authority’s land sales. Decisions like that would only undermine the free market and inflame demand. Only joint action by all government agencies can solve this crisis.
The above article is Haaretz's lead editorial, as published in the Hebrew and English newspapers in Israel.