Contractors' revolt: In response to the Sale Law coming into force today (Thursday), contractors are raising prices for buyers of new apartments by 10% -3%, according to sources in the real estate market.
One of the contractors explained in a conversation with "Israel Today" that the height of the increase is related to the location of the project as well as the construction time.
"Obviously I will increase the price of the apartment, because I take my risk how much I am going to lose. It is a free market and I am allowed to. "I expected that I would raise the apartment by NIS 50,000, and that is what everyone will do. In the periphery, prices will jump by 4-3%, in the center by 10-8% - depending on the price of the land."
Construction in Lod (archive), Photo: Yehoshua Yosef
Another senior official at one of the construction companies told Israel Today: "The state does not put enough land on the market and raises all market prices by tens of percent to bring in billions more in taxation, and in the end invents such a populist law that will solve rising housing prices. The account shows how much damage this takes away from the small profitability anyway, and will increase the price of the apartments accordingly. "
As stated, the amendment to the Sale Law came into force today and applies to the sales contracts that will be signed as of today and does not apply retroactively.
The amendment led by the Ministry of Housing and Construction changes the current linkage, instead of 100% of the price of the apartment being linked to the construction input index, only 40% will be linked.
According to the Ministry of Housing, this part reflects the construction costs only, without the price of the land and other components that are not affected by the increase in the price of building materials.
In addition, according to the amendment of the Sale Law, the price of the apartment will not continue to be linked to the index after the date of delivery if the contractor is late in delivery.
Explain: The construction input index is calculated by the Central Bureau of Statistics and consists of changing various construction components, such as air conditioning, cement, iron, concrete, paints and more.
In recent years, the index has become a significant component in the price of housing, as due to the rise in raw material prices in the last year alone, it has jumped by 6.6% - something that automatically jumps the prices of new apartments.
Construction project, Photo: Yehoshua Yosef
Unsurprisingly, the contractors opposed the amendment to the Sale Act.
With the publication of the memorandum, the law was sharply criticized by the contractors who claimed that the initiative would further raise apartment prices.
The contractors said that not linking the price of land to the index of construction inputs would lead to a calculation of the risk of rising land prices within apartment prices, i.e., an increase in apartment prices.
Something that is indeed being implemented these days.
The Ministry of Housing and Construction says that the law will save apartment buyers hundreds of thousands of shekels.
Aviad Friedman, director general of the Ministry of Housing and Construction, explained in an interview with Israel Today two months ago that the law increases the certainty for young couples who are about to buy an apartment. "Today, when people buy an apartment, there is a huge knowledge gap between buyer and seller.
Buyers do not know how much they are going to pay in the end.
A buyer thinks he is buying an apartment for NIS 2 million, but in the end he pays NIS 2.3 million.
"The contractor's profit is tied to the construction input index - it doesn't make sense," he said.
Meanwhile, on Tuesday, the Builders' Association of Contractors filed a warning before submitting a petition to the High Court of Justice and Housing Minister Zeev Elkin with a demand to repeal or freeze the amendment to the law. "The boiling housing is a thing and a half," the contractors wrote.
As for apartments in programs subsidized by the Ministry of Housing - price per occupant and discounted apartment, the amendment to the Sale Law does not apply to them retroactively either.
That is, the amendment applies only to sales contracts to be signed as of today.
The Ministry of Construction and Housing stated: "The ministry has been working for the past year to protect home buyers and offer them housing solutions at significant discounts. The amendment to the Sale Law is intended to solve a failure that lasted for years, according to which contractors The price of the land was also collected after the contractual delivery date, so that the contractors had an incentive to postpone the delivery date and enjoy the increase in the construction input index. The construction, and that it will not be possible to carry out the linkage after the delivery date specified in the contract. "
"The Ministry of Construction and Housing outright rejects the contractors' claims. The Sale Law is a law that regulates the relationship between the buyer and the seller and not between the developer and the state."
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