Housing Ministry Director Urges Contractors to Lower Land Bids, Predicts Falling Apartment Prices
Translated & summarized from Ice by baba
Yehuda Morgenstern, Director General of the Ministry of Construction and Housing, is urging contractors to lower land bids, predicting continued declines in apartment prices. He noted that winning bids are currently 15% above valuations, and stated the government's goal is consumer affordability. Morgenstern also projected strong housing starts exceeding annual demand and discussed new initiatives for the rental market. Roni Brik, President of the Contractors Association, called on the incoming government to prioritize the construction sector and address the housing crisis.
The story in 6 lines · by baba
- Housing Ministry Director Yehuda Morgenstern urged contractors to lower land bids, predicting falling apartment prices.
- Morgenstern expressed surprise at recent tender results showing bids 15% higher than valuations.
- He predicted apartment prices will continue to decrease, though not dramatically.
- Construction starts are projected to exceed annual demand through 2026.
- The ministry is developing a dedicated rental product, foregoing land revenue.
- Contractors Association President Roni Brik called for government prioritization of the construction sector.
Yehuda Morgenstern, Director General of the Ministry of Construction and Housing, has urged contractors to submit lower bids for land, stating that the state does not aim to profit from these sales. He expressed surprise at recent tender results, where winning bids were approximately 15% higher than valuations, even with multiple bidders. Morgenstern believes that by offering less for land, contractors can subsequently sell apartments at lower prices, aligning with the national goal of making housing more affordable for consumers.
Morgenstern predicted that apartment prices will continue to decrease in the coming years, noting a macro-level drop of about 10% already. He anticipates this trend will continue, though not dramatically. He also projected significant construction starts, with around 70,000 new housing units beginning in 2024, 80,000 in 2025, and 78,000 in 2026, exceeding the annual need of 60,000 to 65,000 units.
Addressing the rental market, Morgenstern acknowledged past failures in creating a distinct rental product, leading to the collapse of previous models. He revealed that the ministry and the Planning Administration are developing a dedicated planning product for rentals, with the state now foregoing approximately half a million shekels in land revenue per long-term rental apartment.
He called on the next government to treat the construction and infrastructure sector as a national growth engine, not merely an interest group. Morgenstern emphasized that construction slowdowns negatively impact workers, suppliers, industries, local authorities, and ultimately Israeli citizens, urging for better coordination and communication between the government and industry professionals.
Roni Brik, President of the Contractors Association, appealed to elected officials to address the housing crisis, the strain on public services, daily traffic congestion, and the precarious employment situation for reservists. He called for a responsible government with clear priorities and urged leaders of both blocs to form a new government that places construction and infrastructure at the forefront of its economic agenda, with measurable goals, budgets, timelines, and a dedicated coordinating body.