‘We are nearing greatest housing crisis ever’
Israel Builders Association President Raul Srugo says the problem is in the hands of the government
Raul Srugo, president of the Israel Builders Association, spoke Wednesday at the 2019 Jerusalem Post Elections Conference, delivering a powerful message: The upcoming elections will be more personal and less political, but one cannot ignore the housing crisis, which is one of the most critical issues in the country.
In his remarks, he revealed several facts:
1 – According to data from the Construction and Housing Ministry, contractors profit around 15.1% minus taxes, which means around 8%. The investment of the government in the cost of housing is more than 60%. “So, it is impossible that the crisis starts with us. Apparently, the problem is in the hands of the government.”
2 – Srugo noted that 55,000 families are formed in Israel each year. If we add to this number the couples who decide to buy, we reach around 70,000. With the expected rise in antisemitism around the world, there is expected to be further need in the coming year. But we only build around 45,000 apartments annually – so this gap is widening each year.
3 – If you look at Israel in comparison to other OECD countries, we see that the basis of our failure lies in infrastructure. The next government should examine how best to investment in infrastructure, as you cannot talk about housing without concurrently discussing infrastructure. “I think that we have done injustice to Transportation Minister Israel Katz. He promoted more infrastructure than any other minister, but there is still much more to go. We must invest between NIS 30 billion and NIS 40b. a year on infrastructure. We need a Transportation Ministry that is forward-thinking and plans today so we can reap rewards tomorrow.
4 – The problem is building enough housing to meet our needs by 2050, when the number of citizens in Israel is expected to double. In other words, we need at least 3 million housing units. We are always proud of what we have been able to accomplish in this country in 70 years, but we need to make this next leap within 30. If it does not happen, we will see cities of temporary houses and tents.
Srugo said that if Israel does not deal with the housing crisis, “we are marching toward the greatest crisis that Israel will have seen since the establishment of the state.”
He said that to solve the problem, we need to think strategically.
“In the early years, they said that we would raise the purchase tax and the bubble would explode,” he said. “But it did not happen – because this is not a bubble. It’s a concrete ball and its growing. And to dismember this concrete ball requires strong tools.”
The solution he said cannot just be subsidized housing, though that can be one aspect of a plan. He praised Finance Minister Moshe Kahlon for his “truly commendable” efforts and said he understood that the minister “wanted to be Robin Hood, taking from the rich and giving to the poor.” But he said it is not enough.
“We need to build 100,000 housing units a year, Srugo continued. “We have to allow foreign workers to come and help us build.
“We are not the problem, we are the solution,” he said of the Builders Association. “On the one hand, they tell us, you have foreign workers, and on the other hand you tax us for bringing in foreign workers. It is untenable.”
He said that with three million apartments to be built, we must expand where we build by developing new metropolitan areas in the Golan Heights and in the Negev.
He added that many mayors are opposed to programs such as Tama 38, which expands and refurbishes area apartments, and that they protest city planning.
“The government must push the mayors to move forward with these plans and strengthen existing housing,” he said.