Israel is facing a housing crisis with home prices continuing in the upward trend and home inventory lacking 100,000 apartments.
As reported by Bloomberg, the housing market could determine how the Israeli politicians would fare in the upcoming election in the country. The publication noted that while the country is home to top scientists and engineers, the housing problem can seem to be solved.
House prices, which have more than doubled in less than a decade, resulted in a mass protest back in 2011. Last year, Israel's home prices rose 7.8 percent, largely driven by the government's low benchmark rate. The average home price in the country stands at $360,000.
There is a need to increase the country's housing supply, but building data doesn't seem good. Last year, housing starts rose 3.9 percent, but completion rate dropped 2.8 percent.
Finance Minister Moshe Kahlon has some measures to introduce but analysts are skeptical they would generated results in the near future. While waiting for the long-term policies to bring results, Kahlon introduced some short-term measures such as the increase in taxes for investors. These, however, fail to address the core issues, said Michael Sarel, a former Finance Ministry chief economist.
"Raising taxes on investors simply reduces the number of rental apartments, which hurts the middle and lower classes as well," he told Bloomberg.
The government recently issued a call for bids from foreign construction companies. According to Globes, six firms will be chosen and each will be allowed to bring up to 1,000 workers to Israel. The call aims to boost construction of residential properties in the country and consequently close the gap between supply and demand. The shortage in housing supply has been driving housing prices in recent years.
Interested companies can submit their bids on or before June 27, 2016, at 12 p.m.