Much has been said about the rise in real estate prices, which, as we know, has three main causes: land prices, the number of foreign construction workers available in Israel, and paperwork (the time it takes to receive a building permit).
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Land prices are a complex issue, since the amount of available land in Israel is relatively small, and land prices are unlikely to fall significantly.
Regarding paperwork and permits – a special, well-oiled mechanism should be created to handle this topic, as is done elsewhere in the world. The wait to receive a building permit can thereby be shortened to a minimum period.
The third component is the most important one: the number of available workers for housing projects. The lack of an alternative to foreign workers has often been discussed, the conclusion being that Israeli workers just won't climb the scaffolds. The sector needs workers for "wet" jobs – plasterers, floorers, steeplejacks, and ironworkers. These, in turn, provide employment to Israeli workers in the "dry" professions, such as plumbing, electrical works, HVAC technicians, etc.
The advantages of bringing foreign workers to Israel are huge: the construction sector drives the economy, and continuous work brings prosperity and economic growth.
The government should stop making ad-hoc decisions about raising or reducing the quota of foreign workers; their number should be regulated by the sector's needs. Israel needs to build about 70,000 new housing units per year in order to fulfill the projected demand for apartments based on population growth. The number of workers should be adjusted to about 40% of this figure, that is, about 28,000 workers.
If the aim is to build more units to create supply and reduce prices, this ratio should be used to calculate the additional number of workers to be brought into the country.
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This rationale should be legislated rather than followed (or not) in provisional governmental decisions. That way, contractors will feel they are walking on solid ground, the country will bring in workers according to the pace of construction projects, and the issue can be removed once and for all from the list of problems in the housing sector.
Solving this issue and shortening the wait for building permits will resolve about 65% of the problem of high housing prices in Israel.
Eldad Nitzan is chairman of the Association of Foreign Workers' Manpower Corporations in the Construction Sector.
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