Three Years After Oct. 7, Southern Israel Recovers While North Awaits Government Action

Three years after the October 7th Hamas attacks and the ensuing war, southern Israel's Gaza border communities are showing significant signs of recovery, while the northern border communities remain in a more precarious state, awaiting government support. While most residents have returned home, four communities in the Gaza periphery have only partially resettled or have not yet begun their return. The direct damages from the conflict are estimated by the Tax Authority to exceed 8 billion shekels over three years. However, a deeper look reveals significant disparities in reconstruction efforts between the south and the north.

In the south, the "Tukuma" administration, established in October 2023, has been actively facilitating reconstruction with the necessary tools to streamline bureaucratic processes. This has led to population growth, economic expansion, and a return of residents to their homes. In contrast, the northern border communities, evacuated due to hostilities with Hezbollah, are experiencing a much slower recovery. The reconstruction task force for the north faced significant criticism, with its initial head resigning in late 2024. A new administration, "Tnuva," was only established for the north in late 2025 and later merged with "Tukuma" under a single director, Aviad Friedman, former CEO of the Ministry of Construction and Housing. The current plan for northern reconstruction was approved only in June 2026.

The Tax Authority reported that while the war in the north lasted longer, the destruction in the south was more severe. The southern Gaza periphery received 61,085 claims at the Ashkelon center, compared to 42,663 claims across the northern centers in Tiberias, Acre, and Kiryat Shmona. Direct compensation for war damages reached nearly 8.3 billion shekels nationwide. Indirect damage compensation was 2.3 billion shekels for Gaza periphery communities and a significantly higher nearly 4.1 billion shekels for northern communities, though this reflects the longer duration of conflict in the north.

Regarding reconstruction budgets, 17.2 billion shekels were allocated for the south and 13.4 billion for the north. However, only 6.1 billion shekels have been utilized in the north, less than half of the allocation, compared to 11.6 billion shekels in the south, about two-thirds of its budget. This difference in budget realization signifies actual progress in rebuilding infrastructure, education, health, tourism, housing, and welfare. The southern reconstruction plan is slated for completion in 2028, while the northern plan is expected to continue until 2030.

Demographically, Gaza periphery communities have seen a population increase of over 9% since before the war, exceeding 65,000 residents by the end of June 2026, with Sderot growing by 16%. In contrast, northern communities, particularly Kiryat Shmona, have experienced population decline, with Kiryat Shmona's population down 4.5% to about 23,000 residents as of August 2026. Business activity in the south has also recovered, with revenues in the first half of 2026 reaching nearly 9.7 billion shekels, a 20% increase from the first half of 2023. Data for northern business activity is less clear, but credit card processing in Kiryat Shmona has not recovered to pre-war levels and has seen an absolute decrease when accounting for inflation.