Couldn't win a lottery for a discounted apartment? No worries. The upcoming lottery, according to the Director General of the Ministry of Construction and Housing, Yehuda Morgenstern, is expected to open at the end of the month. Some 4,000 discounted apartments will be sold in Jerusalem, Petah Tikva, Beit Dagan, Eilat, Ashkelon, Nof HaGalil, Migdal HaEmek, Kfar Bara, Elad and Rechasim. Towards the end of the year, another lottery will open, in which another 6,000 housing units will be drawn.
Map of apartments at a discount. Registration for the next lottery will open soon,
Morgenstern notes in a special interview with Israel Hayom that "in the last ILA council headed by Minister of Construction and Housing Yitzhak Goldknopf, it was decided on a series of measures, including reducing development costs for contractors in order to bring about marketing successes, and updating the discounted apartment plan, in which the amount of discounts outside the demand area will increase. In light of these decisions, we were required to make adjustments to all tenders, and registration will soon open for the next lottery of the discounted apartment program, which will include thousands of apartments throughout the country."
According to him, on Sunday next week, the Housing Cabinet is expected to approve the proposal of the Ministry of Construction and Housing, which is supposed to significantly reduce the cost of apartments in the periphery. According to the proposal, the state will provide a cross-subsidy so that the land will be leased to developers at zero price, and at the same time a subsidy will be given for the development expenses of the contractors (preparing the land for construction in terms of connection to infrastructure).
Construction site in Beer Sheva. "Exploring the possibility of assisting contractors through tax incentives",
"The land in national priority areas, outside the areas of demand, will be sold at zero price, and the development cost to the contractor will be zero or very low. In other words, a person who wins these places at a price per occupant, for example, will receive a 4-room apartment at an average price of NIS 650,800, and in the free market he will be able to buy an apartment at a price of NIS 900,<>-<>,<>. It's affordable housing with a huge message of creating tens of thousands of affordable housing units."
Incentivize local authorities
In addition, Morgenstern reveals that the upcoming housing cabinet will be presented with another proposal by the ministry, designed to incentivize local authorities to approve residential construction by means of financial additions that may reach more than NIS 10,000.
"We were tasked with formulating incentives for local authorities in order to increase the supply of housing. For municipalities it is difficult, every housing unit is a deficit for them. Alongside the actions already taken in the Arrangements Law, we are currently examining the possibility of providing a financial supplement to a local authority that markets: for each housing unit, a local authority will receive a budget both through the land and budgetary money. This matter is progressing in the relevant ministries, and the decision will be brought to the next cabinet. In the end, it's a 'carrot' and an incentive for those who market."
Elkin and Goldknopf. "The previous government did amazing things", photo: Oren Ben Hakon
This proposal is different from the "Arnona Fund" Law, in which it was also decided to "stick" in the form of contributions from business property taxes. This law is supposed to come into effect only next year and is currently in legal proceedings following petitions filed with the High Court of Justice by the local government.
What about contractors?
"In addition to assisting residents and local authorities, the third side for us is contractors, and we are examining the possibility of helping them mainly through tax incentives. We refuse the contractors' request to lower purchase tax for investors, because this will increase demand and raise prices.
"In terms of deferring payments on land, we are doing it in the periphery, while in the center we understand that it will lead to higher prices. Our examination shows that there are tens of thousands of housing units that are relatively available for construction at the moment for contractors, certainly in a declining market. There is no incentive to build, and we want to create a set of incentives for them that will increase supply, thus continuing the downward trend of prices. That's our aspiration."
You paint an optimistic picture here - this is very different from what the contractors say. As far as they are concerned, we are facing a catastrophe of raising prices.
"I'll tell you when Serugu [Raul Serugu, chairman of the Contractors Association] might be right. If we fail to create supply, when the interest rate begins to moderate, we will get a sharp increase in prices here. But if we continue to produce and increase supply, and we succeed in producing supply right now, I don't think we're going to see price increases. I think that the downward trend in prices will continue here, not only in the coming year but in the coming years. In the meantime, we are managing to meet supply and the decline in prices will continue, it will not stop. Contractors will realize they need to lower prices more.
"There are housing needs in the ultra-Orthodox sector, and we make no apologies for the fact that we take care of the ultra-Orthodox public as part of what we care about the entire State of Israel," he said.
"A few months ago we had a big table and I approached entrepreneurs. I told them - there are 140,30 people entitled to a discounted apartment, homeless people who hold a certificate of eligibility from the State of Israel. We grill about 8,10 people a year. You have unsold apartments, let's give some kind of discount, we'll come and connect you and save you marketing. The rate that the entrepreneurs talked about is <>-<>% off, and I ask if there is such a big catastrophe. We know how to bring people, let's give a slightly bigger discount, why don't you (the contractors) lower prices? I think there's an unfair shout from the contractors here.
"I want to point out that this price increase did not happen in a vacuum. Even today, there are tenders in which a contractor from the center of the country wins, with the second bid being at least 40%. So the maximum price contractors set. And then come back to us later and shout 'help us'? Who brought us to this situation? If the claim against us is that we are 'speculators in the land', a person who owns private land does not put it up for sale today for 50% less. That's what we're doing now, we're lowering land prices."
"I don't speak slogans"
One of the criticisms heard on the ground is that the Minister of Housing and Construction cares mainly about the ultra-Orthodox sector. Morgenstern replies: "In the end, every minister has his own party, the sector in which he operates, and in the end he is party chairman. But I look at the work of the office. First of all, the professional independence that the minister gives me and all the professional staff amazes even me. I can't understand what they're talking about. This week I was with the minister in Katzrin, there are no Haredim in Katzrin. Either Beit Shean or Misgav that we visited. The decisions in the recent ILA Council on increasing land discounts in the rural sector, I don't think there is a single Haredi who goes through one committee to one of the localities
. So yes, there are housing needs in the ultra-Orthodox sector, and we make no apologies for the fact that we take care of the ultra-Orthodox public as part of what we care about the entire State of Israel."
Former Housing Minister Elkin said in an interview with Israel Hayom that there is a feeling that there is no housing management policy and there is no "landlord." You've been in the office for nine months and you still haven't presented a proper housing plan.
"To come and present a housing plan at a press conference and say they're going to take care of Airbnb, and in the end nothing happens with it, is writing checks that no one cashes. To me, it's talking in slogans and headlines, and that's the easiest part. In the end, I'm not a politician – I'm a professional, and I'm not interested in speaking in these slogans. Every politician and every minister should do his job, and I'm sure they're doing their job faithfully. The previous government also did amazing things, I got a functioning ministry.
"For that matter, I'm still in touch with the previous CEO. Government continuity creates trust. To come and talk about whether or not a housing plan has been presented is perhaps a discussion that politicians should be asked about. Do I get up in the morning and do the office have an organized housing plan? The answer is unequivocally yes."
The programs of a discounted apartment make homeless investors, and the occupant price winners made a profit of more than a million shekels. Doesn't that bother you?
"It's disturbing. Once the discounts reached more than a million shekels. As of 12 June this year, we passed a council resolution limiting discounts in the central region to NIS 500,600, and outside the central region to NIS 25,<>. As a rule, it's <>% of the market price, and that's the limit."
"I worked hard to get to it"
Morgenstern's career path is not trivial for the Haredi sector. He is a graduate of the Faculty of Industrial Engineering and Management at the Technion and founded a company that encourages the integration of Haredim into the world of employment and academia. "At many junctures in my life, I've been asked if I'm repentant," Morgenstern says, laughing. "So I'm ultra-Orthodox by birth and a Gur Hasid, I grew up as a Haredi all my life. At the age of 24, I entered the Atidim program to fund studies for Haredim and was accepted to the Technion. At first I thought I would do it on the way, learn as I went along, I didn't fully understand what the Technion was, which is the Panevezys yeshiva of the universities.
Technion. "Panevezys Yeshiva of the Universities" (archive), photo: Roni Shaitzer
"I started the preparatory program after my first son was born, and two days before the psychometric exam, my daughter was born. I remember my wife coming with the basket to my parents, and I ask if I can go to the Technion to do simulations. I went in there by merit, not grace. During the 15 months of the preparatory program, I studied from morning to night," he says, showing us the notes he still keeps, and admitting: "I worked hard to get there. Starting in the third semester, I worked almost full-time. I started my degree with one child and finished with five. I immediately started graduate school. I started with economics, but very quickly moved on to a master's degree in history, I felt I had to, after my degree at the Technion - with calculus, statistics, etc."
Morgenstern previously served as a director of the Tel Aviv-Jaffa municipality's water corporation, Mei Avivim, and as acting CEO of the Bnei Brak Economic Company. He says he did not know Minister Goldknopf personally until he received a surprise phone call from him. "I had a lot of stomachaches and doubts about whether to take the part," he admits. "I was in a comfortable place in the local government, which feels a bit like a commando ship – you move the steering wheel and feel that something is happening, and coming to national power is much more complicated. And I finally lived fifteen minutes from work, a father of six. And to come and take such a demanding role... I just went home yesterday at midnight."
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