Behind the Headlines Government Officials Explain Housing Situation

When Finance Minister Pinhas Sapir announced early in March that too many apartments were being built in Israel and that he had therefore persuaded the contractors to cut down by 12,000 units in the coming year he left a lot of questions unanswered. Israelis and Israel’s supporters abroad wanted to know how in March there was suddenly a surfeit of homes when in January and February there had been panicky talks of a housing crisis.

Government officials now offer a two-part answer to explain the apparent contradiction. Firstly, they say, Sapir did not mean there were too many flats being built for immigrants, for young couples, and for slum dwellers. The surfeit was on the private market. As for the suddenness of his conclusion–that was simply the result of erroneous figures provided by the Central Bureau of Statistics which were only corrected last Feb.

In Nov. the Bureau reported that 76,000 apartments were being built throughout Israel. But in Feb. it was reported that there were in fact 82,000. The extra 6000 were almost all in the private sector.

NO CUTBACK ON IMMIGRANT HOUSING

As a result of these figures, and as part of the government’s general drive against inflation, Sapir decided that private home building must be cut back. By threatening the contractors with a tax on all expensive apartments he forced them to agree to cut back by 12,000 a year, i.e., instead of some 30,000 privately built homes originally planned for next year, less than 20,000 will be built.

There is to be no cutback, however, in government-built housing for immigrants and needy Israelis, Sapir’s assistant, Dan Halperin stressed. Some 30,000 such apartments were originally planned for next year for these purposes and they will all be built. Indeed, the government hopes they will be built more quickly now that the pressure on the building industry from the private sector, both on manpower and on materials, is somewhat alleviated by Sapir’s cutback.

The cutback on private building is likely to escalate the soaring prices of housing still further. But, says Halperin, prices were rising anyway, even with oversupply and with private apartments lying unsold and vacant for many months. Contractors have been making such handsome profits, Halperin said, that they could afford to wait rather than sell for less.

The Treasury, Halperin continued, is as keen as the individual citizen to check prices, but the alternative facing the Minister was to cut back–as he has done–or to let the building industry continue in its present overheated condition until a sudden slump occurred. With thousands of empty private flats on the market, a slump would be a distinct likelihood, Halperin said. He said that past experience played an important part in Sapir’s decision. In 1966 a similar, situation of overbuilding existed and a slump did indeed set in, forcing the government to buy up hundreds of apartments it did not need, driving many contractors to the wall and causing massive unemployment.

FALSE PROGNOSES HAD SOME VALUE

Barry Cherniavsky, economic advisor to the Housing Minister, added that the cutback on private building will tend to discourage speculation in housing whereby people with money to spare have been investing in flats which they allow to remain empty until prices rise. He said keeping the prices of flats up while cutting down supply is itself anti-inflationary in that it deters people from buying. Young couples, new immigrants and slum dwellers–those who comprised the real “need” rather than the economic “demand”– would be compensated by higher loans and grants from the government to help buy their homes, he said.

Cherniavsky labeled the earlier warnings of an immigrant housing crisis, which have since died away “hysteria.” He admitted that there was a difficult period at the beginning of the year but said that even the “hysterical warners” could have seen by studying the figures that it would pass by the spring. Both Halperin and Cherniavsky pointed out that some good emerged from the false prognoses of an immigrant housing crisis. The government decided to induce rental homes for immigrants by offering income tax concessions to landlords who rented apartments at reasonable terms for olim. The experiment has been successful inasmuch as nearly 3000 homes have already been rented by the government. But only 800 immigrant families have so far agreed to avail themselves of this opportunity as a short term solution to their housing problem.

NOT ALL AGREE WITH GOVERNMENT

If the shortage in immigrant housing is only transient why is the Housing Ministry importing hundreds of trailers as stopgap solutions for new olim? Cherniavsky explained that the trailers would still be useful because they would release housing facilities at absorption centers. Jewish Agency director general Moshe Rivlin also stressed that the immigrant housing program had not been cut at all–on the contrary he is urging that it be increased. With aliya conditions in Russia as they are at present, Israel must have a reserve on hand.

Not everyone agrees with the government. Yitzhak Deutsch, a leading economic commentator, believes that by simply publishing the figures showing a surfeit of housing in the private sector, the free play of market forces would eventually deflate prices. According to Deutsch, the construction of private housing for the wealthy and subsidized housing for the poor are directly linked. As the higher economic brackets move into new housing, each lower bracket family advances a step into the apartments vacated, Deutsch said.

The government is aware of this but prefers more rigorous planning. Apart from the 30,000 new flats it builds for immigrants and young couples each year, it finances another 20,000 “housing solutions” which involves enlarging existing flats or assisting buyers in their purchase.

An exhibition of ceramic sculptures by two Israeli ceramists Nora and Naomi, will open at the Jewish Museum in New York on Wednesday April 11. The exhibition, titled Impressions From Sinai, displays ceramic sculpture by Naomi Bitter and Nora Kochvi, who were invited here by Avraham Kampf, the artistic advisor of The Jewish Museum after he had seen their work in Israel.

Officer NEW YORK . WASHINGTON . PARIS. LONDON . JERUSALEM . TEL AVIV. JOHANNESBURG . BUENOS AIRES . SAO PAULO . LIMA Correspondents Ins UNITED NATIONS . CHICAGO . LOS ANGELES . TUCSON . MONTREAL . TORONTO . MEXICO CITY . CARACAS . SANTIAGO de CHILE . RIO de JANEIRO . BONN . BRUSSELS . AMSTERDAM . ROME . ATHENS . COPENHAGEN . VIENNA . GENEVA