BICOM

Finance Minister Moshe Kahlon yesterday presented the first phase of his plan to lower housing costs in Israel, an issue high on the public agenda and on which Kahlon has staked significant political capital.

Rising housing costs were a major component of the massive social protests in summer 2011 and have subsequently been a key issue in both the 2013 and March 2015 elections. In February, Israel’s State Comptroller Joseph Shapira published a stark report on the housing market, warning that that spiralling costs could have a devastating impact on the middle class and the overall economy. It detailed a 55 per cent rise in house prices from 2008 to 2013 and a 30 per cent increase in rent prices during the same period.

Meanwhile, Kahlon and his Kulanu Party ran for office in March on an agenda for socio-economic reform. In particular, Kahlon pledged to reform the banking sector and the housing market. Since becoming Finance Minister, he has sought to bring the various bureaucratic tools impacting housing planning under his purview. Most significantly, he successfully moved the Planning Administration from the Interior Ministry to the Finance Ministry in a bid to streamline the planning process. Current Interior Minister Silvan Shalom called Kahlon’s changes “insolent, foolishness and folly.”

Nonetheless, Kahlon has established a Housing Cabinet, which approved his first phase of reforms which were announced yesterday. They include increased tax on real estate investments, increasing the number of units for sale, an increase in the land available for developers in return for housing targeting the middle class and greater housing construction specifically for rent.

Kahlon said that the government is “finally taking responsibility and presenting unprecedented reforms, in a balanced manner that will increase the supply of available homes.” Prime Minister Benjamin Netanyahu commented that he and Kahlon “are committed to doing everything possible to lower the cost of housing for Israelis… We are definitely on a new and daring path that I believe will succeed.”