The Housing Shortage Proposal

By Michael and Yehudah Fuah

The following is a summary of Manhigut Yehudit's proposal for a solution to the housing crisis. This proposal was written by Manhigut Yehudit Director Michael Fuah and his son, Yehudah and presented to Finance Minister Yuval Steinitz this past winter.

Approximately 93% of the land in the State of Israel is owned by the State. The Israeli government by means of the Israel Land Authority is the body that decides how much land will be marketed. Between 2005 and 2010, an average of 27,832 housing units were put on the market. Demand for housing units created by the addition of new households was approximately 44,000 units per year. This has created a shortage of available housing units.

Basic Assumptions for Solution:
The basic assumption of the writers is that the housing shortage was created because of erroneous conduct of the Israeli government. The solution is in its hands.

The writers oppose any government interference or investment in the housing market, except for aid in infrastructure construction in the periphery.

The Israeli government must afford the free market the proper conditions in which to overcome the current shortage in a reasonable amount of time, and to create conditions to prevent a further deterioration in the housing market.

Solution Parameters
Every year, Israel's government must market enough lots for construction to cover the growth in the number of expected new households for that year. The government must also market additional lots over the coming years that will reduce the existing shortage. The expected growth in new households is 50,000 per year. There is currently a shortage of between 100,000 and 120,000 housing units. With this in mind, the minimum number of housing units necessary to solve the problem is 24,000 housing units per year for five years to overcome the existing shortage, plus 50,000 units per year to keep up with expected growth for a total of 74,000 housing units per year.

Land Reserves in Israel

Negev and Galil:
In an effort to disperse the population over a wider geographical area, land in the Negev and Galil for the construction of apartment buildings will be marketed to builders at no cost on the condition that they build and sell housing within three years.

Coastal Region:
Israel's crowded coastal region suffers from a severe housing shortage. The only realistic solution to alleviate the problem is to build housing at the foot of the Judea/Samaria mountain range.

Flooding the housing market with free lots in the Negev, Galil, Judea and Samaria will allow people to buy houses that are already planned on paper at low prices almost immediately. This will release considerable pressure from the entire housing market.

The great success of Modi'in should be copied to the Neveh Tzuf region, Ariel, Karnei Shomron and Avnei Chefetz; all a 15-20 minute drive from the coast on a south-north axis. Apartment buildings should be constructed in all these areas with the appropriate infrastructure.

Jerusalem
Jerusalem is the capital of Israel and needs a unique plan. We recommend the "Greater Jerusalem Plan" proposed by the Greater Jerusalem Council.

Economic Implications:
Currently, the State of Israel profits handsomely by keeping supply of land low and marketing it at outrageous prices. This must stop immediately. Supply must significantly increase, which will in turn lower the prices to reasonable levels.

Click here for the full report in Hebrew.