* Newspaper poll finds PM's popularity plummeting
* Peres sees a "crisis of the middle class"
* Central bank chief backs PM's plan
(Adds protests to continue, paragraphs 9-10)
By Steven Scheer
JERUSALEM, July 26 Prime Minister Benjamin
Netanyahu pledged on Tuesday to implement "huge" housing reforms
next week to try to stem growing protests against the high cost
of living in Israel that have sapped his popularity.
Student-led activists have set up tent camps and held often
rowdy sit-down demonstrations in Israeli cities this month to
demand lower rent and land-ownership prices.
In parallel, doctors have intensified a more than
four-month-old strike for better wages and conditions, spreading
the sense of crisis among a middle class that bears Israel's
heavy tax burden and sustains its conscript military.
"The housing crisis in Israel is a real problem. This is not
a fake issue and whoever has empathy in his heart understands it
is a problem," Netanyahu said in remarks to reporters broadcast
live on television and radio stations.
He unveiled a plan, dubbed "Residence in Reach", under which
the broad-based, conservative coalition government would enable
the sale of more state-owned land, provide low-rent housing for
students and the poor, and cut through red tape on realty deals.
"We will complete two huge changes next week, because
ultimately you have to breach the bureaucracy," said Netanyahu,
a free-market champion who, as finance minister under a previous
administration, leaned on Israel's public sector spending.
His promise on student housing received a smattering of
applause from demonstrators watching the news on television in
Tel Aviv. They dismissed other remarks as "spin".
Finance Minister Yuval Steinitz, speaking after Netanyahu,
said property prices would "stop climbing, or begin to fall" by
Activists said they would keep up their protests.
"The people of Israel took to the streets because of the
housing problem, but they will stay because of the rest. And
they will stay until the prime minister and the government of
Israel present a serious, revolutionary plan that will solve in
depth and immediately the social crisis the majority of the
nation is suffering," said activist leader Daphni Leef.
A poll published in the liberal Haaretz newspaper on Tuesday
found 32 percent of Israelis were satisfied with Netanyahu's
performance while 54 percent were not, a reversal of survey
figures from May.
Then, when Netanyahu received standing ovations at the U.S.
Congress as he outlined tough terms for Middle East peace, 51
percent of Israelis supported him and 31 percent of respondents
said they opposed his policies, according to Haaretz.
Bank of Israel Governor Stanley Fischer backed Netanyahu,
saying "the long-term solution to the problem of housing prices
must come mainly from an increased supply of housing".
Home prices have jumped about 50 percent since 2008. Fischer
partly blamed cut-rate mortgages that arose from Israel's
reduction of interest rates to 0.5 percent at the outset of the
global financial crisis. He has since raised the key rate 10
times to 3.75 percent, while the central bank has also tightened
restrictions on mortgages to try to bring down housing prices.
The crisis is paradoxical, coming as Israel enjoys economic
growth that is among the world's fastest, with 5 percent seen
for 2011. Despite low wages compared with Western countries,
unemployment was at a two-decade low of 5.7 percent in May.
But high prices of basic goods have become headline news.
Early in the year, protests forced Netanyahu to cancel a
planned tax hike on petrol. Last month, public outrage over
soaring cottage cheese prices led dairies and retailers to cut
prices and the government to find ways to increase competition.
"We all feel that this is a crisis of the middle class,"
President Shimon Peres told reporters separately.
(Additional reporting by Maayan Lubell and Ori Lewis; Editing
by Dan Williams and Elizabeth Piper)