You wanted housing prices to drop, but the state has other plans
Promises are one thing, reality is another: an investigation reveals that construction tenders in the first half of 2026 are at their lowest point, despite official assurances of an increased housing supply. We examine why this is happening and its connection to the power struggle for the ILA director position.
Three weeks without a new tender — this is the latest 'achievement' of the Israel Land Authority (ILA). Last week, we criticized the tender process, which is unfolding in parallel with the battle over the appointment of a new director for the authority. It has now emerged that no results for new tenders have been published in the past week. In fact, the authority's tender committee has not convened to approve a single tender since July 6.
The importance of multi-family construction tenders cannot be overstated; when they are not issued, the housing supply stalls. Contractors are not building, and the gap between high demand and low supply, which had narrowed over the last two years, may widen again. Our investigation shows a significant decrease in multi-family construction tenders. The ILA is not only prioritizing 'Target Price' (Mehir Matara) tenders over free-market ones, but the bids themselves are far from the levels seen in peak years.
The question of whether contractors are hitting the brakes is secondary. Their bids are weaker because the market is slowing down, but when the authority markets land in such low quantities, the poor results for the first half of the year are hardly surprising. Our check shows that from January 1 to the end of June, the tender committee approved only 15 tenders for free-market multi-family construction. This is the lowest figure for any half-year period since the beginning of 2024.
For comparison, 20 tenders were held in the first half of last year, and 29 in the second. In the first half of 2024, there were 20 tenders, followed by 40 in the second. Comparing the current half-year to the previous one reveals a decrease of nearly 50% in multi-family construction tenders.
We compared multi-family construction tenders in the first half of 2026 with 'discounted apartment' tenders. The result: 16 'discounted apartment' tenders were held in six months. The state is marketing more affordable housing tenders than free-market ones. Most of these 'discounted apartment' tenders are currently earmarked for reservists, local residents, and the disabled. The general public without housing looking to buy on the free market is almost entirely ineligible for these units.
Construction completion data also distorts reality. These figures include discounted apartments, which are relevant to only a small segment of the public, and even with the increase in completion data, they remain low relative to the requirements of the strategic housing plan.
Beyond that, the decline in the number of tenders is dangerous as it could drive up housing prices. It directly impacts the inventory of apartments to be built in the coming years. If the current situation persists, we will continue to see accelerated construction of discounted apartments, suggesting that the state is unable to address the core issue: high housing prices. Consequently, the price of an average apartment remains artificially stable.
Meanwhile, the battle for the position of ILA director continues. While Finance Minister Bezalel Smotrich is pushing for the appointment of Yehuda Eliyahu, the search committee will soon convene to decide on the matter, with several other candidates under consideration. The decrease in tender volume comes against the backdrop of this power struggle over the very authority that Smotrich previously called to close.
