Rising Doubts Over Israel’s Discounted Housing Program as Market Prices Shift
More than 100,000 recent registrants for Israel’s “Dira BeHanacha” (Discounted Apartment) program view winning the lottery as a rare chance to buy homes below market prices amid soaring housing costs and high mortgage rates. However, not all winners find the deal advantageous, as some projects face delays or cancellations, and the economic benefit of subsidized apartments is increasingly questioned.
A notable example emerged from a May 2023 lottery in the city of Harish, where a winner who secured position 3,393 out of 115 available apartments expressed skepticism after being notified of their win due to cancellations by others. This sparked debate about whether the program still offers real savings, given the weakening housing market and sellers’ willingness to lower prices in both new and resale markets.
The Harish project by Y.A. Alon set prices at 12,400 shekels per square meter before VAT, or 14,632 shekels including VAT. With a 20% discount capped at 300,000 shekels, a 100-square-meter four-room apartment costs about 1.16 million shekels, roughly 11,632 shekels per square meter. While still cheaper than recent resale prices averaging 12,700 shekels per square meter and new builds at 14,500 shekels, buyers face additional costs such as years of rent (around 4,000 shekels monthly in Harish), inflation adjustments, and upgrades often needed due to basic project specifications.
Real estate agent Sagie Ekstein noted that Harish’s housing market has softened since interest rate hikes, with sales demand dropping and rental demand rising. He cited cases where discounted apartments were less attractive than market alternatives, leading some winners to forfeit their rights. The Ministry of Construction and Housing stated that prices are based on 2022 valuations by the Israel Land Authority and that buyers can choose whether to accept their lottery win. The ministry emphasized that comparing new subsidized apartments to resale units is not straightforward due to differing characteristics and delivery timelines and reaffirmed its commitment to expanding housing supply and lowering prices for all buyers.
This case highlights the complex trade-offs faced by Israeli homebuyers relying on government-subsidized housing amid a volatile real estate market.
