Despite numerous plans by the government and the hopes of first-time homebuyers that prices on apartments in Israel will fall, Finance Minister Moshe Kachlon cautioned Israelis not to expect too much change – to the relief of current homeowners who often have their life savings tied up in their homes.
Home prices will not go down more than 5 percent, if that, Kahlon said in an interview on Army Radio Thursday. “No politician really wants housing prices to fall by 30 percent,” said Kachlon. “If that happened, the economy would crash. We do not want to create a crisis situation – we want a good economy that will benefit Israel’s 8 million people, who will be able to go shopping at the supermarket and pay reasonable prices, and house their families at a reasonable cost.”
It is not realistic to expect housing prices to return to their levels of ten years ago, said Kahlon. “Nothing goes back to the way it was in the past like that,” he said. “Look at the economic crisis in other places, around us. But I can assure you that we will find a way to enable young couples to buy homes.”
Prices have continued to rise since he took office nine months ago, Kachlon acknowledged, but “we are in the middle of working on this. We have planned construction of 100,000 homes, work has begun on 60,000 of them, and we are flooding the market with land tenders. In addition, our ‘Price Target’ and other programs are bringing prices down.”
Of course, previous Finance Ministers, like Yair Lapid and Yuval Steinitz, came into office with grandiose plans as well – but left with their tails between their legs, learning a bitter lesson on the difficulty of change in Israel’s housing market. Kachlon believes he is different. “In the past, there were many plans drawn up, but the ministers failed to take on the responsibilities to get the job done. I have done that. We already see the changes in the market,” he added.