Bank Leumi CEO: Bureaucracy Drives Up Housing Prices, Public Sector Lacks Measurable Goals

Hanan Friedman, CEO of Bank Leumi, stated at the Globes Israel Real Estate Conference that Israel's economy has shown remarkable resilience, growing rapidly despite recent geopolitical turmoil and the ongoing war. He attributed this strength to the country's solid economic foundation and the effective monetary policy managed by the Bank of Israel, led by Governor Professor Amir Yaron.

Friedman highlighted that while high-tech, defense, and innovation are key growth engines, an efficient and accessible housing market is a prerequisite for sustained economic expansion. He criticized the public sector for its inefficiency and excessive bureaucracy, contrasting it with the business sector's progress. According to Friedman, the public sector's lack of measurable goals, transparency, and accountability hinders progress, particularly in real estate development.

He pointed out that the average duration for a residential project has increased significantly, with lengthy delays in obtaining permits and occupancy certificates, directly increasing housing costs for buyers. Friedman argued that this bureaucratic inefficiency adds more to housing prices than interest rate fluctuations. He urged for the public sector to adopt business-like standards, including clear, measurable goals, performance metrics, and incentives, to streamline processes and reduce barriers.

Friedman expressed concern that without addressing these systemic issues, the housing market will continue to face price surges due to the imbalance between supply and demand, hindering overall economic growth. He emphasized that reforming the public sector is crucial for healing sectors suffering from bureaucracy and for fostering the growth of the housing market, which is essential for the Israeli economy's continued success.