"I think that the market now knows that the government wants to lower home prices. The public has lost of its trust lately, but I don’t think that that is due to this government, but to all recent governments," said Minister of Finance Yair Lapid at the "Globes" Real Estate Conference in Tel Aviv today.
"Everyone knows that real estate is a market with its own schedule. This year, after a good many years, the housing supply will exceed demand, and that is the key to lowering prices. If we build more homes than people want to buy, prices will fall. It's not complicated; it's the basic law of supply and demand. I am convinced that we will meet the joint Ministry of Housing and Ministry of Finance target, and that prices will stop rising by the end of 2014 and will fall in 2015," said Lapid.
"If someone has a magic solution, the problem would have been solved already. There is no single solution, and we're working together to find the right set of solutions. At the next housing cabinet meeting on March 24, we'll present an organized housing plan."
Responding to the Central Bureau of Statistics' data, which show a 124% jump in housing starts in Judea and Samaria, Lapid said, "I don’t like it. Building in all kinds of mini-settlements that might not be within Israel's borders as part of a peace treaty is neither smart nor justified, and we should stop it. I'll probably need more than 19 Knesset seats to stop this entirely, but we're in constant trench warfare on this matter."
"Globes" editor-in-chief Hagai Golan: In central Israel, something like 50-60% of an apartment's price is the government's take. Is there a way to reduce this so prices will fall?
Lapid: "Yes. I think that the government bonanza from land prices is over. I want us to lose money on land. The argument that we want to continue profiting from land forever is a myth, a dark conspiracy. Every Israeli politician knows now that the housing shortage is the most threatening crisis we face, and that it is therefore necessary to lower housing prices. We'll do this through land. We must think of techniques to do this right, without creating a second crisis."
Let's talk for a moment about the demand side. It is said that the Bank of Israel's low interest rate policy adds fuel to the flames.
"It doesn’t help, but I refuse to take the easy path and blame the Bank of Israel. Governor Dr. Karnit Flug has a set of monetary considerations designed for other parts of the economy, and I refuse to hide behind the question of how to blame the prime minister, the Bank of Israel, or the housing minister. My goal is increase the supply, and if we increase the supply over a sufficiently long enough period, home prices will fall. I'm not looking for someone to blame. If I wanted to blame someone, I wouldn’t have put my name on housing. It's not my job; I could have said that it's the housing minister's job. I'm doing this because I know that prices will fall, and everything I'm taking now will offset by a political dividend next year. The risk is worth it."
You recently outlined a vision for building 150,000 rental apartments. How does this fit with Israelis' wish to own their own homes, even if they have to pay a mortgage for 40 years?
"Many people rent in Israel. I read a survey in "Globes" among renters, most of whom said that they want to continue renting in the long term. We're trying to create a parallel market. If there are 150,000 rental apartments, rents will fall, which will bring down home prices, because people will leave their expensive apartments and move to cheaper rental apartments. This affects the entire market and creates more supply. Until now, there haven’t been enough rental apartments. People say they'll go to Berlin? In Berlin, most people rent."
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2014
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