The Ministry of Finance expects housing starts to total 50,000 units in 2015, and is setting an ambitious target of 60,000 units in 2016, according to the ministerial work plan. According to the plan, the main housing tasks facing the Ministry of Finance in 2016 are increasing the supply of zoned land, removing planning obstacles, increasing the number of deals signed with the Israel Land Authority (ILA), publishing more buyer fixed price tenders, increasing marketing of state land zoned for housing by the ILA, increasing the number of production factors in the real estate market, increasing quotas for foreign workers in the construction sector, and reducing the cost elements in the production of housing.
The plan sets 2016 targets of 100,000 housing approved by the planning authorities, 55,000 housing units marketed by ILA, signed deals for 40,000 housing units, and increasing the quota of foreign workers to 30,000. Achievement of these targets is expected to lead to 60,000 housing starts by the end of the current year.
It should be noted that almost every one of these targets represents an improvement over 2015. In deals signed by the ILA (land marketed and purchased by contractors, developers, or other parties), the 2016 target of 40,000 is 33% higher than the 30,000 in 2015. For (residential) land only, the target of 55,000 housing units is 25% more than the 44,000 housing units in 2015. Taking into account the pace of marketing and approved deals in recent years, this target is an ambitious one requiring a great effort by the professional echelon in order to achieve it. At the same time, where the roof agreements signed with local authorities and the number of housing units approved by the planning authorities are concerned, the 2016 targets are close to the 2015 figures: 99,000 housing units approved in 2015, compared with a 100,000 target for 2016, and roof agreements for 50,000 housing units, the same number as in 2015, planned in 2016.
Ministry of Construction and Housing target: 90,000 buyer fixed price apartments in three years
The Ministry of Construction and Housing is trying to project the supply of housing units slated for construction under the buyer fixed price plan using an index of "eligible parties who bought an apartment in buyer fixed price projects." According to the work plan, the Ministry of Construction and Housing expects the sale of 25,000 apartments at reduced prices in 2015 under the plan; in other words, developers will win tenders for 25,000 apartments and receive building permits for them. The working plan includes increases in this figure to 30,000 apartments in 2017 and 35,000 in 2018, making an ambitious target of 90,000 housing units purchased in tenders with their construction begun by the end of 2018. Only two projects have received building permits to date, in Afula and Lod, totaling only a few hundred housing units. The Ministry of Construction and Housing faces two significant challenges in this effort: accelerating the marketing of land in the plan and devising mechanisms for allocated the housing units to those eligible. The Ministry of Construction and Housing's 2016 target for marketing in the buyer fixed price plan is 15,000 housing units.
Another interesting point in the working plan involving the buyer fixed price plan is the target for issuing eligibility certificates for it. While the 2016 target of the sale of apartments at a reduced price is 25,000, the 2016 target for issued certificates of eligibility is 250,000. This is another indication of the ratio between supply and demand in this area.
Another target set by the Ministry of Construction and Housing is a substantial reduction in the number of those eligible who have been waiting for public housing for over a year. While the number of those eligible in 2015 was 1,708, the work plan sets targets of only 750 by the end of 2016 (a 56% reduction), 450 by the end of 2017, and only 150 by the end of 2018 - a planned reduction of 91% in those waiting for public housing in three years.
Another subject addressed in the work plan of the Ministry of Construction and Housing is urban renewal. The Ministry of Construction and Housing plan provides for signed urban renewal framework agreements with the local authorities (which will guarantee infrastructure financing for local authorities), increasing the supply of housing in the context of urban renewal, and continued promotion of the Urban Renewal Authority, which is currently being discussed by the Special Knesset Committee to Discuss the National Authority for Urban Renewal Bill.
The Ministry of Construction and Housing's work plan stipulates measures for increasing the efficiency of the Israeli construction market and making it more effective by promoting industrialization of construction, increasing the supply of professional workers in the sector (both Israelis and foreigners), establishing a training and qualifications system, cutting back on construction regulation, and upgrading the research capability and know-how in the sector.
The Ministry of Construction and Housing also plans to deal with the length of time taken at each of the stops in the construction sector, from planning until the housing units are handed over for occupancy. Under the work plan, the statutory length of time from the beginning of planning until the plan goes into effect is slated to fall from 44 months in 2015 to 37 months at the end of 2016. The time from the publishing of land marketing tenders until a contract is signed with the land purchaser is also slated to fall from nine months in 2015 to seven months in 2016.
Published by Globes [online], Israel business news - www.globes-online.com - on February 28, 2016
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