Knesset Panel Earmarks $1 Billion to Ease Israeli Housing Shortage

The Israeli government has taken a first step to ease the housing crisis, which the private sector, for reasons not clear, seems reluctant to tackle.

The Knesset Finance Committee on Thursday approved a special $1 billion budget requested by the Housing Ministry, the bulk of which, some $400 million, will be spent this year to import prefabricated houses and mobile homes.

The imports were proposed by Housing Minister Ariel Sharon who had, in fact, requested a $3 billion budget and questioned the ability of private builders to cope with the crisis.

Amikam Oren, director general of the Housing Ministry, told the Knesset panel that private contractors did not seem anxious to plunge into the local housing market.

He said that so far, only 800 apartments are being built out of the 45,000 authorized by the government for this year.

Finance Committee Chairman Avraham Shohat said he was at a loss to understand why the private contractors are holding back.

The Contractors Association, meeting Thursday with Finance Minister Yitzhak Moda’i, was told that mortgages for young couples would be increased shortly and the gap narrowed between their cost and the lower interest charged new immigrants.

The housing shortage has always been a social problem for Israel. It worsened in recent months because of the heavy influx of immigrants, mainly from the Soviet Union.

They receive government rent subsidies. As a consequence, landlords have doubled or tripled rents, driving many low-income young couples out of their homes into “tent cities,” which have cropped up all over the country this summer.

The imported prefabs and mobile homes will be for evicted couples no less than for new immigrants.

Meanwhile, to encourage construction, the Housing Ministry has guaranteed contractors it will purchase up to 85 percent of all the apartments they build.

But a spokesman for the contractors said later that “a few more financing problems need to be resolved before the building commences.”

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