From PM Netanyahu's Remarks at the Start of the Weekly Cabinet Meeting, 19/07/2009 [my emphasis added]:
I read the newspaper headlines today about the construction of a neighborhood in Jerusalem and I would like to re-emphasize that the united Jerusalem is the capital of the Jewish people and of the State of Israel. Our sovereignty over it is cannot be challenged; this means – inter alia – that residents of Jerusalem may purchase apartments in all parts of the city.
This has been the policy of all Israeli governments and I would like to say that it is indeed being implemented because in recent years hundreds of apartments in Jewish neighborhoods and in the western part of the city have been purchased by – or rented to – Arab residents and we did not interfere. This says that there is no ban on Arabs buying apartments in the western part of the city and there is no ban on Jews buying or building apartments in the eastern part of the city.
This is the policy of an open city, an undivided city that has no separation according to religion or national affiliation. We cannot accept the idea that Jews will not have the right to live and purchase in all parts of Jerusalem. I can only describe to myself what would happen if someone would propose that Jews could not live in certain neighborhoods in New York, London, Paris or Rome. There would certainly be a major international outcry. Accordingly, we cannot agree to such a decree in Jerusalem. This has been the policy of Israeli governments over the years and it is also the policy of our Government."...