News analysis: Netanyahu's housing plan not to satisfy critics   2011-07-28 04:14:53 FeedbackPrintRSS

by Adam Gonn

JERUSALEM, July 27 (Xinhua) -- Israeli Prime Minister Benjamin Netanyahu presented Tuesday his plan to deal with the housing crisis as demonstrations throughout the country continued for a second straight week.

Netanyahu, who has been criticized by the opposition and within his own party for his handling of the situation, convened a special press conference to outline emergency measures aimed to alleviate the housing distress.

Under the proposed plan, the state will subsidize a 50-percent discount on government-controlled lands designated for the construction of low-cost housing projects for both purchase and renting. Other measures include lowering public transportation fares and persuading commercial real estate owners to convert their properties into residences via incentives.

Netanyahu estimated that some 50,000 new housing units would become available within 18 months, 10,000 of which are dormitories for university and college students.

Rent control is uncommon in Israel as most people lease their apartments from private landlords without any official regulation on prices.

Analysts said Netanyahu's plan would alleviate the housing crisis more or less, but only in three to five years, which wouldn 't be enough to satisfy the protesters. However, some new legislation the demonstrators demand may not solve the problem at all due to the lack of implementation.


Prof. Shlomo Mizrahi of the Ben-Gurion University of the Negev told Xinhua he doubted that the plan would solve the housing issue. Netanyahu may have a bigger problem to deal with, he said.

"There is a lot of dissatisfaction with the government, a lot of lack of trust in the government and a lot of frustration among the middle class," Mizrahi said.

"All these measures, if at all implemented, will only show results in a few years and therefore it's not enough for the people in the streets right now," he added.

According to Mizrahi, the new legislation to regulate the market the protesters are calling for is not a good solution as well, because experience in Israel shows that legislation in many cases would not be implemented when the administration doesn't like any part of it.

"If the goal is simply to calm the streets then legislation will do, but if the goal is to solve the problem then legislation won't do it," Mizrahi said.


One of the main problems of the Israeli housing market, according to Prof. Elia Werczberger of Tel Aviv University, is that few new house is built for renting. It results in a situation where there is an increased demand for apartments to be rent but not enough apartments in the market, which will push up prices as people are forced to rent on the private market which is unregulated.

"There is a significant house renting stock that now is vacant. A lot of apartments have been bought by people as an investment or weekend housing," Werczberger said.

He added that if the treasury would be willing to provide tax exemptions for people or corporations that are willing to rent, allowing them not to pay tax on their income from renting, then that would provide a very significant addition to the housing stock.

However, current regulations favor owning over renting, Werczberber said, "In order to solve the housing problem you would have to have a complete change in the housing policy."

He doubted whether Netanyahu or anyone else would be interested in imposing a housing policy that would lead the prices to decline and the property to lose some of its value.


Prof. David Nachmias of the Inter-Disciplinary Center in Herzliya said Netanyahu may be facing his toughest political challenge of his premiership.

"There are several problems, not only the housing crisis, but also the rising prices of commodities including food, gasoline and electricity," Nachmias said, "where the middle class is being hurt really badly. They are protesting."

He added that at the same time, people are also protesting against the concentration of wealth and finances in the hand of a relatively small number of people.

"It's a serious crisis, and given that Netanyahu and his governing coalition might indeed be in trouble," Nachmias said.

Nachmias argued that the current crisis is a much more complex problem for Netanyahu than the diplomatic pressure he faces regarding to the peace process with the Palestinians.

While it might have been possible for Netanyahu to tell the Americans that he is planning to do something but then do nothing and still get away with it, Nachmias said, but when it comes to domestic politics, that wouldn't be possible.

"With internal problems, if you don't deal with them, people see that, and they immediately don't accept it and react. That is what's happening now with the protests," Nachmias said.

Editor: yan
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