New inter-ministerial cabinet to tackle Israel’s housing crisis

Construction and Housing Minister Yitzhak Goldknopf will head a soon-to-be-established, inter-ministerial cabinet tasked with tackling Israel’s housing crisis, the ministry announced on Sunday.

The ministry said Goldknopf’s proposal to form the new cabinet was met with approval, paving the way for the new coalition headed by Prime Minister Benjamin Netanyahu to launch its own program to shape the housing market, marked for years by grossly inadequate supply and steep price rises.

Goldknopf will be joined on the new committee by a host of top government officials including Finance Minister Bezalel Smotrich, Transportation Minister Miri Regev, Education Minister Yoav Kisch, Agriculture Minister Avi Dichter, Environmental Protection Minister Idit Silman, Energy Minister Israel Katz, Minister for the Development of the Negev and the Galilee Yitzhak Wasserlauf, and National Missions Minister Orit Strock, head of the newly created office under Netanyahu will have some powers over West Bank settlements.

The Interior Ministry also has a seat on the committee, though it is not clear who will staff the spot. Shas leader Aryeh Deri was let go from his position as minister after the High Court of Justice barred his return to ministerial office, due to past financial crimes and an apparently broken pledge to leave political life. Deri appointed current Religious Affairs Minister Michael Malkieli as acting interior minister.

Goldknopf said the new cabinet will meet in the coming days, without providing further details, such as how frequently the committee will meet.

The makeup of the committee highlights a determination to take a multi-disciplinary approach to housing development and urban renewal, addressing the need for residential development to go hand-in-hand with appropriate supporting infrastructure and to take into account issues of sustainability and the environment.

A construction site for new housing in the central Israeli city of Be’er Ya’akov, February 22, 2022. (Yossi Aloni/ Flash90)

The ministry said, “in light of the government’s policy to act to lower housing prices and increase the supply of apartments, there is a fundamental and immediate need to pool resources between all the parties and to remove barriers that arise to achieve the target goals.”

Goldknopf has so far instructed Construction and Housing Ministry staff to work on plans that maintain last year’s record numbers of building starts, in a bid to ensure supply. The previous government, in office just roughly a year, touted an ambitious housing plan in late 2021, with a target of about 70,000 housing starts a year for 2022-2025 to quickly increase the supply of apartments and combat soaring prices.

That goal was met in 2022, and the new housing minister hopes to walk the same path.

According to the ministry announcement Sunday, the housing cabinet will set government policy on housing and approve any structural changes to streamline processes and remove construction barriers, formulate policy measures on planning and construction to advance urban renewal projects across the country, offer incentives for residential construction, maximize land use, and promote projects that help deliver housing that the free market does not necessarily prioritize like affordable and public housing, and long-term rentals — all of which are in short supply and often excluded in redevelopment schemes, which tend to focus on luxury housing.

The housing cabinet will also oversee decisions on the clearance of land for housing purposes, discuss needed reforms in the Israel Land Authority, and coordinate between ministries on issues like budget, transportation, infrastructure, education, and environmental concerns.

Goldknopf said the formation of the new cabinet was “a significant and important move to obtain solutions and remove barriers to promote the construction of new units.”

“I am confident that it will help us to deliver on the central mission and our moral duty — to provide young couples with the possibility of purchasing a roof over their heads. The cabinet’s first meeting will take place in the coming days. There is a lot of work ahead of us and we must start as soon as possible.”

Cranes working at sunset on a construction site in Jerusalem, September 1, 2021. (Nati Shohat/Flash90)

The government currently offers support to first-time buyers through the Mehir Matara (Target Price) lottery scheme, initiated by the previous housing minister, Zeev Elkin. The program, which just closed its fourth round, is heavily over-subscribed, underscoring the housing market crisis.

Small groups have formed to protest climbing housing prices since last summer, but the outrage over the rising costs has not spurred people to engage in the mass protests seen in Israel in the summer of 2011 when demonstrators gathered weekly to demand action on the rising cost of living.

Housing prices in Israel have risen much faster than average wages, and combined with the higher costs of borrowing money, they appear to be contributing to an overall slowdown in the number of transactions even though the number of households in Israel is continuously rising.

The cost of an average apartment in Israel is now NIS 1.9 million ($556,000) according to the latest information from the Central Bureau for Statistics, and almost NIS 3 million ($878,000) in Tel Aviv.