As part of its low-cost housing program, Israeli Finance Minister Moshe Kahlon planned to build more than 15,000 new homes including 250 apartments that were sold at extremely competitive prices in Modin.

Some people are already talking about a fall in the prices of the real estate market, because, thanks to this program, the price of land has been reduced to 1.3 million shekels per apartment with a tender for a total of 59 homes an envelope of 60 million shekels

This operation is called Targeted Price Operation (apartments whose prices are well below market prices are sold as part of a lottery subject to many participation criteria). This frontal attack by the Kahlon Ministry against real estate prices seems to have a positive impact. According to the Minister of Finance  10,000 homes have already been sold and it is expected that before the end of the year 10,000 additional housing units, in addition to the 15,000 already planned, will also be sold.

However, the impression of an already significant fall in prices is perhaps an illusion. A study conducted on the city of Modiin on various classic real estate promotions out of a total of 252 dwellings (apart from the operation of the targeted prices). This survey shows that bidding for 59 dwellings was granted for 60 million shekels while the expert estimate did not exceed 36 million shekels (for a total land cost of 1.3 million per apartment) . 

This famous operation of targeted prices aims to sell apartments in the city of Modiin at prices on average half a million shekels below market prices; for example a house of 85 m² will sell for a price of 940 000 shekels, this is well below current market prices. In the same spirit, a five-piece will be sold 1.2 million shekels.

In the previous study for the same city in 2014, the average cost per apartment for the cost of land and construction costs is between 350 and 600,000 shekels!

These unquestionable figures clearly show an increase in housing prices.

With 85 projects in 24 communes, Kahlon's ministry has organized a lottery including housing built in Yavneh, Rishon Lezion, Rosh Haayin, Herzeliya, Beit Shemesh, Ramle towns. These cities have the advantage of having shuttle systems that connect them to Tel Aviv, the country's economic capital.

Regarding the north and south of the country, this housing plan also concerns the cities of Haifa, Shlomi, Mitzpe Ramon and Harish.

However this project already begins to be decried, some accuses to have the opposite effect that wishes. Indeed, according to Itzik Shmuli, a member of the Zionist Union, this application of the low-cost housing plan has, according to him, led to a rise of 8% in real estate prices in the place  a drop (source The Marker, financial daily).  Indeed, many promoters are persuaded to be able to sell their apartments despite these dwellings at targeted prices.

It goes without saying that these figures published by the BCS - Central Bureau of Statistics - against the plans of the Minister of Finance while the latter hoped for lower prices. Some critics will say that Kahlon sacrificed those seeking to improve their living conditions for the benefit of young couples.

 

Source: Calcalist