Israel to permit financing of apartment purchases in installments

Housing and Construction Minister Yitzhak Goldknopf (UTJ) intends to approve a plan to purchase land in installments. 

The intention is that the Israel Land Authority will market land to contractors, and they will transfer the cost of part of the land component to the benefit of buyers which will make it easier for them to purchase apartments.

This plan is being examined by the Housing Ministry and has the support of Shlomi Heisler, director-general of the Finance Minister, who takes into account the expected decrease in state revenues in this case. 

Yet, anyone who buys an apartment will sign a legal obligation, similar to what is customary in tabo, the registry of land deeds, to repay this fee when the apartment is sold.

Housing crisis plan to be unveiled soon

Soon, Goldknopf will reveal his long-term plan for solving the housing crisis. The intention is to continue at full speed the marketing of the land and to allow the continued increase in construction starts. Goldknopf wants to convey credibility and stability to avoid the fear of price shocks.

As part of the issue, the ILA will assist contractors in purchasing land through installment payments. This is intended to ease any problems with liquidity and deal with the expected sharp drop in land prices.

Kwint believes that in light of the increase in construction starts and land marketing, apartment prices are expected to decrease. In a conversation with Maariv, he added: "Apartment prices in the March index fell by 0.2%, which is the beginning of a trend that will continue." 

Prices of new apartments have been falling for several months beyond what's reflected in the index. The laws of the economy eventually work in housing as well.

Kwint added that the ILA marketed 230,000 housing units within the last two years along with transactions for 160,000 apartments. Add the interest rate and the understanding that prices are expected to fall, and it's easy to see why prices will continue to fall. 

Price offers from contractors for buying land are tens of percent lower than in the past, which is another indication of a drop in prices.

Kwint expressed his disappointment that within the framework of the latest insolvency law, an infrastructure fund wasn't established which could help accelerate the establishment of residential neighborhoods through special budgets.

Kwint also said that Goldknopf will study the construction industry in depth and formulate a plan addressing all the issues that are on the table. The general direction is to continue as much as possible to increase the housing supply as the ILA has done in the last two years, which will be a strong sign of stability.