Housing Ministry Chief Urges Contractors to Lower Land Bids as Prices Fall
Housing Ministry Director-General Yehuda Morgenstern urged contractors to lower land bids to cut consumer prices, predicting a continued decline in housing costs as construction starts surge.
Ministry of Construction and Housing Director-General Yehuda Morgenstern has sharply criticized contractors, urging them to lower their bids on state land tenders to help reduce housing costs for consumers. Speaking at a contractors' organization conference, Morgenstern emphasized that the state does not seek to profit from land sales and expressed surprise at aggressive bidding behavior.
"I look at tender results and am surprised by them. I cannot understand the mathematics. We see winning bids that are roughly 15% higher than the official appraisal when there is more than one bidder," Morgenstern said. He added that developers should submit lower bids so they can subsequently sell apartments at more affordable prices to the public, framing this as a national mission.
Turning to macroeconomic trends, Morgenstern asserted that housing prices will continue to decline in the coming years. He noted that macro data already indicates a correction of about 10% in housing prices, though he cautioned that this trend will not manifest as a dramatic market crash. According to the housing ministry chief, the market will soon absorb rising housing supply, with projected housing starts reaching 70,000 units in 2024, approximately 80,000 units in 2025, and an estimated 78,000 units by the end of 2026. These figures significantly outpace the annual demographic demand, which stands at 60,000 to 65,000 units.
Addressing the rental housing sector, Morgenstern pointed to historical missteps in taxation models and incentives, noting that the state is currently forfeiting roughly half a million shekels in land revenues per apartment for long-term rental projects. He called on the incoming government to treat the construction and infrastructure sector as a primary national growth engine rather than a mere interest group, warning that administrative halts directly harm workers, suppliers, and municipal authorities.
Meanwhile, Builders Association President Roni Brik urged newly elected officials to confront the harsh socio-economic reality facing young couples, reservists, and students. Brik called on political leaders from across the political spectrum to rapidly form a stable government and establish an integrated national task force to oversee the construction and infrastructure sector with measurable goals, budgets, and clear ministerial accountability.
