Media Real Estate CEO's Club/Niv Aaronson
"As I have warned several times in the past, the government's lack of hand in the housing market leads to a renewal of price increases in the housing market. It is doing it with its own hands," says the president of the Contractors Association, Raul Sargo.
Sargo said these things following the continued rise in housing prices as reflected in the March index which rose by 0.6%. Housing prices that are not included in the index increased in the last month by 1% and in the last three months by 3.1%. A notable rise was in the Tel Aviv and Haifa areas.
According to the president of the contractors, "I submitted to the government a comprehensive plan to address the housing market, including increasing the supply of investments in the industry." The demand for apartments is 70,000 per year, but construction starts amount to only 45,000. The shortage will renew the price increases."
He explains that "We offered to reduce the purchase tax for investors to encourage buying, but instead they want to extend the temporary order with a tax of 8%, which is a serious mistake. Contractors are unable to sell apartments on paper. Contrary to claims, it is not the investors who raise housing prices."
According to him, "We have offered combination deals: instead of land that the state sells, you will receive apartments that you will designate for long-term rent or alternatively sell them to REIT funds or as part of a target price. The apartments will be sold in any case at a higher value than the value of the land.
"Now we are focused on bringing foreign workers to Israel, encouraging Construction starts by providing incentives and a safety net to contractors because of the high interest rates. The regulation of the foreign workers is killing us. The government is preventing the entry of Palestinians for security reasons, but in the end they will be forced to admit Palestinians as well."
Sargo added that "We recommended giving contractors who build in the periphery a tax credit on their income from the central area in order to make construction in the periphery economic. However, they did not do anything. They did allocate money for clearing construction in the periphery of NIS 50,000 per apartment. But the budget is limited and few projects will be carried out."
In response to the question of how the government reacts to the claims, the president of the contractors says: "I have not heard any serious response from them. We meet all the time, but the state does what it wants and pays no attention. It does not understand that the industry is the engine of the economy. It suffers from mental fixation and a lack of taking responsibility." .
Regarding the continuation of the price trend in the market, he adds: "Prices are on the way to a double-digit jump. The demand for apartments is tough, people are getting off the fence after getting used to the high interest rates for fear that the apartment prices will run away from them. Because of the war, they are looking for new apartments with MMDs even if it involves more debt.
"Demand comes from couples who get married, divorce, new immigrants who come to Israel and some improve housing. This is 70,000 households compared to a supply of 45,000. Because of this gap, I foresee a crazy double-digit increase in prices later this year. The demand for apartments is rigid."