Why are housing prices only rising? The reasons are known – lack of supply of apartments, insufficient planning, everyone’s desire to live in the center, the interest rate which was low until recently, but a problem that does not receive enough public attention is the fact that the mayors do not want residents. They prefer commercial real estate (offices) – ‘so that the residents will live somewhere else and come to work for us’, so say the mayors. Why? Because the property tax payments that the public pays are lower than what they need from the municipality, but in contrast to this – offices pay 5 times the property tax but almost no You get in return. Of course, all the mayors know how to do basic math and that’s why they all want offices and not residents… So where will the people live? ‘In the next city, but not in my place.’
The one who points this out today again is the CEO of Rami Yankee Quint (it’s not that the Israel Land Authority is blameless, of course. It makes sure that the country makes a great profit on the land, and it’s still worth listening) who said today at the Union of Urban Engineers and Architects conference: “The problem is not only The relationship between the local government and the central one, but also the relationship within the government itself. The ministers face each other. The housing crisis is not only related to the RMI. Even when we try to find solutions, the treasury officials try to thwart them. I think that it is precisely the central government that is the weakest against the local authorities and succumbs to this conflict that mayors prefer employment areas to residences“.
So Quint only hinted, but in practice this is a significant problem – the mayors are sitting on the edge of real estate: the municipality has to approve construction on its territory, and if it does not approve, then everything is stuck. But in order for the mayors to want residents and not employment – the solution is to raise the property tax for residences and reduce the property tax for businesses. Is anyone in the government able to promote such a solution, even though it is a very unpopular move with the public? Unfortunately, to date, the answer is no. The members of the Knesset and the ministers do not lead the public but drag it along and the result is that they do not solve market failures.
This is also what Prof. Omer Moab said recently, in an interview with Bizportal: “Although it is not popular to say this – the property tax should be raised for residences and the property tax should be lowered for businesses, but no one dares to do it because people will see it in their pockets.”
According to MK Eitan Ginzburg (Blue and White) at the same conference in Eilat, another factor in the housing crisis is the political instability: “Changes of government clog budgets, clog programs that have not been launched, there is no policy. Every apartment that is sold has a purchase tax and a purchase tax, but not even a shekel of these millions goes to the local authorities. No wonder the mayors object when for every infrastructure or service to the resident they have to beg like beggars for money from the government offices, when in any case the relationship is one of hostility and not of cooperation.”
And what do the mayors want? Mostly more money
Givatayim Mayor Ran Konik said that the local authorities are unable to recruit personnel for the planning departments: “There is a lack of plan inspectors who earn NIS 7,000 and have to stand up to the real estate sharks. They fail to recruit construction inspectors on a meager salary. We are debating with a government that changes every few months, that does not understand its construction and is mainly busy with politics. How can it be that an official in the Ministry of Finance determines the salary of the city engineers and the workers in the planning committees and not the mayors? I need bike lanes in the city. I don’t have the same money as the Tel Aviv municipality and I need tens of millions. The minister was not ashamed to tell me: ‘You are not ours, so you will not see a shekel.’ A coup is needed. We are in bankruptcy and existential danger. There is no government, no stability, no governance and no policy. And yet they don’t release our powers.”
Almond alternative? A program full of bugs
MK Ginzburg went on to attack: “The Shaked alternative (the plan that will replace TMA 38. NA) is a bad solution. We tried to improve it and introduce changes, but it has a lot of bugs” The program “does not deal with the issue of earthquakes and does not provide an answer to the periphery.
Konik also claimed that “TMA 38 is the biggest enemy of urban renewal.” Most of the people in the government are inexperienced and have no idea what is happening on the ground. TMA 38 failed an hour after its establishment 20 years ago because they did not understand, and still do not understand, that the same plan cannot be applied in completely different cities, when even within my city there are areas that are not suitable for it. This is the biggest mistake that fails urban renewal – no tenant He will go for urban renewal when he has the option of TMA 38.”
A 30% decrease in mortgages from the peak of March, a 5% decrease compared to the previous month
Yesterday, the Bank of Israel’s monthly mortgage data were published, according to which, since the peak of March, there has been a 30% drop in new mortgages. In August, the public took out mortgages amounting to NIS 9.64 billion. This is a 5% decrease compared to the previous month and a 19% decrease compared to the corresponding month of August last year. However – from a historical point of view these are still high numbers, since until a few years ago they took NIS 5 billion a month.
The reason for the decrease in mortgages is the interest rate giving its signals – the interest rate is rising and the public’s mortgage repayments are becoming more expensive. The effect of the latest interest rate increase will be reflected in the September numbers, which are expected to be slightly lower anyway because of Rosh Hashanah; Interest rates have soared by 73% since March – but this still does not lower apartment prices.
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