More Housing or Just More PR?

The Ministry of Finance and Ministry of Housing and Construction approved late Sunday a multi-billion-shekel fund to make good on years of promises by successive governments to expedite housing construction. It was also a cornerstone of Yair Lapid’s Yesh Atid election campaign, where the party promised to build 150,000 rental apartments.

“For this purpose, the Ministry of Housing and Construction will manage a ‘barriers fund,’ the objective of which will be to facilitate the removal of barriers in places where infrastructures requirements delay a large number of housing starts,” the Ministry of Housing announced.

The barriers listed included national outline plan conditions, and requirements for road interchanges and sewage treatment plants as conditions for selling housing units.

Housing Minister Uri Ariel (Jewish Home) expressed the hope that the measure would help lower home prices. “It is not enough to sell land for the sake of selling if the supply of housing is to grow. Sales must be effective, and must enable developers to build tens of thousands of additional housing units nationwide and increase the housing supply. This is the most important tool the government has for lowering home prices.”

However, as Hamodia (Hebrew edition) reporter Shay Rosen noted, the tracts of land under discussion — mostly in Kiryat Gat, Kiryat Bialik, Rosh HaAyin-East and Modi’in — have long been in the pipeline, and have been stuck for a variety of reasons. It is hard to see how the new fund will solve these problems. The new plan also does not represent the release of any land that has not already been tagged for development.

Furthermore, the approximately 8,000 housing units per year for three years being referred to amount to a mere fraction of the 150,000 new rental units originally promised by Finance Minister Lapid.

Ohad Danos, chairman of the Israel Land Appraiser’s Association, voiced skepticism that the plan would do anything to ease the housing shortage.

“This is a waste of taxpayer’s money,” he said. “The ministers do not realize that you build apartments with actions, not words. There is no economic incentive for builders to construct 150,000 rental units, so it will not happen.”

This article appeared in print on page 7 of the October 1st, 2013 edition of Hamodia.