1.4 B NIS Plan Aims to Accelerate Housing, Prevent Rising Prices and Strengthen Israel’s Periphery

After two months of negotiations and a 600 million NIS reduction from the original proposal, the Israeli government is expected to approve a major 1.4 billion NIS plan on Sunday to accelerate housing construction. Of this amount, 750 million NIS will be allocated to subsidize development in the periphery, and 300 million NIS will incentivize local authorities to approve large-scale housing projects.

By Nimrod Bosu, Nadlan Center

The plan, jointly advanced by Finance Minister Bezalel Smotrich and Construction and Housing Minister Haim Katz, aims to maintain the current pace of housing starts and prevent home prices from rising. Although leaner than the Ministry of Construction and Housing’s original 2 billion NIS proposal, it still represents a significant investment in Israel’s housing market.

The largest component of the plan is a 750 million NIS subsidy to deepen development grants in national priority areas, designed to encourage developers to bid for tenders outside high-demand regions. In some cases, high development costs alone have rendered tenders unprofitable, even when land is offered for free.

Another 300 million NIS will go toward grants for municipalities that issue a high number of building permits, both for infrastructure development and, for the first time, for general municipal budgets. An additional 250 million NIS will incentivize municipalities to expedite building permits for urban renewal projects through framework agreements with the Government Authority for Urban Renewal—a move that has proven highly effective in past years.

Sixty million NIS will be allocated to streamlining foreign worker recruitment in the construction industry—35 million NIS to the Ministry of Housing and Construction, and 25 million NIS to the Population and Immigration Authority. Another 30 million NIS will be directed toward planning on privately owned land with multiple owners.

The budget reduction from the earlier 2 billion NIS plan reportedly came at the insistence of the Finance Ministry, which sought to focus funding on 2025–2026 without long-term commitments extending beyond those years.

“The Plan Will Ensure Continued Acceleration of Construction”

Finance Minister Bezalel Smotrich said: “The housing market is a key growth engine for Israel’s economy. With the right direction, we can reshape the demographic map of the Negev and Galilee and bring real social progress to young couples. This national housing plan focuses on deepening subsidies for development and urban renewal in the periphery, especially for reservists, ensuring continued construction growth, strengthening the Negev and Galilee, and creating real opportunities for young families.”

Housing and Construction Minister Haim Katz added: “The data shows that focused acceleration programs deliver results. This plan maintains momentum, strengthens municipalities, and continues to inject oxygen into a sector that is a core engine of growth. Working closely with local authorities, we’re signing record numbers of framework agreements, removing barriers, and ensuring construction moves forward efficiently across the country.”

Yehuda Morgenstern, Director General of the Housing Ministry, said: “The acceleration program we launched in recent years has already led to a sharp increase in marketing and construction rates. This new plan builds on that success with a focus on the periphery, urban renewal, and expanding the construction workforce.”

Ronny Brik, President of the Israel Builders Association, praised the initiative: “Now is the time to accelerate Israel’s economic engine—the construction and infrastructure sector. After two challenging years, this plan must not be the last. Israel must expand and accelerate housing, commercial, and infrastructure construction to bridge wartime gaps and return the economy to its growth path.”