After more than a year of collecting data on the Price Resident discount apartment program, the Knesset Research and Data Center reported this week that the average discount to buyers of homes under the program is 21.2 percent below the average market value for homes nationwide. Israelis eligible for the program are able to buy a home for an average of NIS 290,000 below the average market value, the Center’s report said.
The data was based on 77 Price Resident projects around the country, all of which are under construction. Under the program, the state provides discounts on land for contractors who commit to building a portion of the apartments in a project specifically for the program, and they are marketed at a discounted price to young couples and others who do not own homes. To qualify to purchase an apartment under the program, candidates apply and are chosen by lottery.
The incentive for the contractors is getting a discount on the leases of state land on which the projects are built, and those discounts come out of the state’s pocket. According to the report, the state will have “lost” NIS 6 billion as a result of the program by the end of 2018.
The report was set to be discussed in a session of the Knesset Economics Committee, amid claims that purchasers of homes under the program were getting a bigger discount in the center of the country than in peripheral areas – quite the opposite of what the state intended, as the point of the program is to develop areas outside the center. According to the report, however, the claim is true; the higher the market price, the greater the shekel discount for buyers. However, the report said, that could not be helped, since the discount for purchases in the program were based on a percentage discount, and overall the program was accomplishing its goal.