Whether it is a change of policy or an admission that its plans are not succeeding, government officials in recent weeks have changed their tune about what Israelis can expect in terms of future real estate prices. If just a few months ago, officials talked about how new government programs such as “price target” and “price resident,” in which developers get special tax breaks for building more affordable homes, would lower the cost of housing for all, the tone and “tune” of those statements have changed, say industry observers quoted in business daily Globes.
As if to confirm that change, Housing Minister Yoav Galant said in an interview on Army Radio that the purpose of the government programs was to provide affordable housing for young couples who have been unable to afford homes until now. When asked about lowering prices, Galant responded by saying that “our objectives are related to increasing supply, not lowering the price. I am sure that supply will influence price, but I cannot control that relationship.”
Price, he said, was determined by more than supply. “You have to take into account the interest rate for mortgages and other sources of funding. How can I responsibly predict these things? I believe in the idea overall free market competition to reduce the cost of housing, and I believe that when there is a substantial supply of homes at 25% below market value, as our plan proposes, it will have a significant impact on prices, but I cannot predict this,” Galant said.
One factor that has been discussed in recent days that is affecting the pace of new construction – and thus the supply of new homes – is the lack of construction workers. In the interview, Galant promised to bring in more workers, one way or another. “We have a new plan that will entail the construction of not just apartments, but a ‘neighborhood price’ program to promote the construction of whole areas – schools, roads, stores, parks, etc. There is no way this can be done without bringing in outside help, whether it is workers or partner companies, and I expect that to happen,” he added.