Supply of Land and its Effect on the Housing Market

Land Use

Israel's land-marketing policy is determined almost entirely by the Israeli Lands Administration which owns about 95% of all the land in Israel An IEP research prepared by Applied Economics Ltd., shows that during the last decades, the Israeli Lands Administration land-supply was consistently and significantly lower than the market’s demand, thus contradicting expressed government policy to increase land supply in order to meet the growing demand.

The gap between supply and demand was created in the nineties due to the mass immigration from the former Soviet Union and has been growing ever since. Such a gap brings a significant increase in housing prices (rental and purchase) and deterioration in living standards for many households in Israel.
Our research shows, that given an efficient supply of lands, the average housing prices in Israel today would be lower by approximately 35% (about 381,000 NIS).