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Price per occupant: Affordable, but there is also a "catch" that is worth paying attention to - Walla! Of money

2022-03-15T09:42:14.995Z


Recent lotteries of price per occupant indicate that the stock of apartments is running out. Winners can certainly enjoy a significant discount, but there are also quite a few obstacles in the way of realizing the benefit


Price per occupant: Affordable, but there is also a "catch" that is worth paying attention to

Recent lotteries of price per occupant indicate that the stock of apartments is running out.

Winners can certainly enjoy a significant discount, but there are also quite a few obstacles in the way of realizing the benefit, and the payment may also increase

Nir Shmol, guest column

15/03/2022

Tuesday, 15 March 2022, 10:50 Updated: 11:29

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Recent lotteries of price per occupant indicate that the stock of apartments in Israel is running out.

In addition, the expected wave of immigration increases the pressure on the dwelling stock of dwellings.

According to data from the Central Bureau of Statistics, within eight months the stock of new dwellings in Israel will be completely emptied.



Next week, a large lottery will be held for those entitled to a price-per-tenant program, in which about 10,000 housing units of the order of about 150 different projects throughout Israel will be raffled off, including in the demand areas.

These are lotteries that are almost the last remnant of the plan, which Moshe Kahlon conceived when he was finance minister.



This is, as stated, Minister Kahlon's flagship program in the field of housing, in which discounts of hundreds of thousands of shekels were given for the homeless who have their first apartment, as well as for those entitled to the program according to parameters set by law.

In light of the fact that in Israel planning procedures take many years (an average of five years for an approved master plan, and another 2-3 years for an average building permit), the program that began in 2016 is still ongoing, and will soon end in recent lotteries for eligible beneficiaries. Since then, two new finance and housing ministers have been appointed.

More on Walla!

Apartment buyers attack price per occupant: "This is our last chance"

To the full article

The supply is getting smaller - prices are rising, and lotteries are a last chance (Photo: Reuven Castro)

Out of about ten thousand apartments in the big lottery, about 4,000 housing units are concentrated in four cities - Lod, Dimona, Acre and Ashdod.

In the areas of demand in Tel Aviv, Jerusalem, Rishon Lezion, Or Yehuda, Bnei Brak, Tel Aviv and Haifa, ie in the central cities and major cities in Israel, only about 2,000 housing units will be drawn.



According to the goals of the Ministry of Housing in 2022, the target for lotteries for those eligible is about 30,000 housing units, and if the State of Israel does meet it, it will be breaking the previous record of lotteries price per occupant, which stands at about 28,000 housing units in one year.

Although the ultra-Orthodox Knesset members are located outside the existing government after the election, about 6,000 public units are planned for the ultra-Orthodox public in the coming year, in an amount far beyond the lotteries for ultra-Orthodox eligible people who were part of the previous government.

In the future planning, there will also be lotteries for about 2,500 housing units, which are designated for those entitled to the Arab public in Israel, mainly in the cities of Nazareth and Umm al-Fahm (in addition to apartments in Turan that will be included in the lottery).



As you may recall, during Minister Litzman's tenure as Minister of Housing in the Israeli government, the price per occupant program was renamed "Reduced Price", and most of the lotteries this year are the product of Litzman's work to approve the plans.

This is because in light of the bureaucracy used in Israel, the fruits have ripened, even though the former minister has ended his term.

It is important to note that during 2021, about 100,000 housing units were marketed by the Israel Lands Administration - a historic record for land marketing in Israel.



Although the planned lotteries are expected to take place this year, the winners of the program will receive the apartments within 5-3 years on average in light of planning, development, execution and construction procedures.

It is important to note that the lotteries are conducted without a building permit, so the main goal of the program is an attempt to cool the housing market, even though as stated the program is eligible to receive the apartments in quite a few years.



The type of apartment, the number of rooms, the design of the apartment at this stage without a building permit is not known at all and is not final until the building permit is obtained, so there is a good chance that some program winners will miss an opportunity to buy an apartment in the free market in the meantime. Let there be a detailed planning of the apartment and the project to waive eligibility for the apartment, in light of a mismatch to their needs.

A plan with pros, but also cons.

Minister of Housing, Zeev Elkin (Photo: Yossi Alterman)

Nir Shmol (Photo: Tomer Feder)

Housing Minister Zeev Elkin has initiated and approved a new housing plan called "Target Price" and first tenders have already gone out to contractors in recent months.

They will include thousands of new housing units, most of which will be raffled off in 2023. This plan also includes a combination of free market construction and discounted apartments, as part of a target price plan with discounts of up to NIS 300,000 or up to 20 percent off the market price.



These are combined complexes of free market and discounted housing, where often the division of apartments in the same residential building is for the free market and also for the eligible.

It is important to note that the tender brochures for those eligible for these projects have not yet been published and in order to be able to grill the apartments for those eligible for the Ministry of Housing, tender brochures must be issued before the lotteries.



The large mass we are seeing these days of massive lotteries is due to the continuing rise in housing prices in recent years, with a particularly dramatic rise in the last year mainly and breaking records in housing prices in Israel.

Therefore, Minister Elkin's goal is to show the efforts that the government is making in an attempt to cool the rising housing market, despite the high demand and in this way remove from the market "pressures" to buy mainly from young and homeless couples.



In 2021, as mentioned, not only a record was broken in the increase in housing prices of more than 10 percent per year on average, but also a historic record of the purchase of new apartments in a total amount of about 56,000 apartments.

The government's efforts to curb the increases are currently amounting to multiple lotteries and tax increases for investors who purchase their second apartment or beyond.

Prominent benefits of a goal plan

  • Significant discount, especially in areas of demand that can reach up to NIS 300,000 or up to 20 percent off the market price.

  • Buying an apartment for the homeless, young couples and eligible for the program at a final price, when the housing market is on fire and real estate prices keep rising.

  • Sale of thousands of housing units in areas of demand, despite the low chances of winning and the high demand for these apartments - thousands of families will be able to buy an apartment in areas of demand at a significant discount.

  • The integration of the apartments between the free market and those entitled to the program will lead to heterogeneity among the tenants in the projects, with hundreds of young families and a developed community life with diverse populations.

  • There are significant lotteries for the ultra-Orthodox and Arab population who crave apartments, in light of the high rate of population growth and the small number of cities in which this population lives.

  • The cooling of the housing market at a time when real estate prices are not stopping to rise, demand is huge and supply is limited.

The salient disadvantages of a goal plan

  • Grills today enter the apartment in 5-4 years on average.

    There is no immediate housing solution for the populations and families that need housing today.

  • Purchase without a building permit - there is currently no certainty about schedules, apartment planning, size, air directions, landscape, etc. The right to an apartment is being grilled today and only in about two years on average do we know what we have drawn and whether it really suits our needs.

  • Yet most dwellings are not in areas of demand but in peripheral areas, where fewer people want to live in light of the reduced possibilities regarding education and employment.

  • The management fee in the building, the technical specifications of the building and the apartment are not yet closed and it is not known how much money will need to be added to the apartment, in order to finish it according to our needs.

  • The index of construction inputs and the final price of the apartment is not yet known until the end of construction and the delivery of the apartment, despite detailed instructions for the way and the form of calculation of the index.

    The apartment may cost tens of thousands of shekels in light of the lengthening of the construction.

The author is the CEO of the Urban Development and Renewal Company and the Snir Company.

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  • Apartments

  • Price per occupant

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Source: walla

All business articles on 2022-03-15

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