The government’s “price target” plan to lower the cost of apartments for first-time homebuyers kicks in on Monday. The cabinet easily passed the plan, which was proposed by Housing Minister Uri Ariel.
The plan was approved after it was considered on its own, independent of the Zero-VAT plan proposed by ex-Finance Minister Yair Lapid, which has now been officially shelved. The plan includes construction of up to 20,500 apartments that will be sold at a maximum price. The apartments will be sold to eligible families and couples who win a lottery.
Under the program, builders are given licenses to construct homes on Israel Land Administration parcels if they agree to build, market, and sell homes at a maximum of 80% of the going rate in a market. Under the expanded program, builders will bid for that lowest price – so that the homes they build could be sold at a discount of 30% or more of the market price for a similar home.
The advantage, say proponents of the plan, is that the final price of the home is known in advance. The price of the land for all bidders is a constant, so builders can figure that in to their valuations. The apartments must be specific standards for size, quality of materials, services, etc., so there is no danger of a builder using substandard material in order to build more cheaply.
Commenting on the approval, Ariel said that he was grateful to Prime Minister Binyamin Netanyahu for his assistance on the matter. “This is a wonderful program that we have given a great deal of thought to and decided to implement after a great deal of consultation with experts. We expect that the program will have an important influence on market prices and make homes more affordable for thousands of Israelis.”
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