The big news of the day did not come from a developer or a bank. It came from the State Comptroller, Israel’s official watchdog. In a report published on Wednesday, June 24, he warned that the country’s home loan market now carries the kind of risk that looks like the United States subprime crisis of 2008, and that the Bank of Israel did not tighten its supervision fast enough as that risk grew. The headline number: the public’s total mortgage debt rose from about NIS 300 billion in 2015 to about NIS 630 billion in 2025, more than double in ten years. The Bank of Israel pushed back hard and called the report unprofessional.
While the watchdog looked at the debt side, city planners had a very busy day on the supply side. In just 24 hours, three cities moved large housing plans forward: Beit Shemesh cleared a policy document for 66,000 new homes, Holon advanced its first ever state funded “roof agreement” for about 10,700 homes plus a new stadium, and Jerusalem’s local committee pushed seven renewal plans worth about 2,700 homes. Add a small Safed plan, hundreds of homes at Kibbutz Galil Yam, and a Negev tender, and a single day put close to 79,400 future homes onto the planning track. Meanwhile, contractors on the northern border warned that some of their projects could become empty “white elephants” if the state does not help buyers. Here is what each of these means for a buyer, a renter, or an investor right now.
The watchdog says Israel’s mortgage market is carrying 2008 style risk
The State Comptroller is the official body that audits how the government and its regulators do their jobs. His new special report, out June 24, is the first to put a hard number and a clear warning on how heavy Israeli households have become with home loans.
The core finding: the outstanding balance of the public’s mortgage debt grew from about NIS 300 billion in 2015 to a peak of about NIS 630 billion during 2025. That is the total amount still owed, not a single year of new lending, and it is in plain shekels, not adjusted for inflation. The report ties most of that climb to home prices, which rose roughly 60 percent over the decade.
It is not just the size of the debt, it is the quality. The share of loans the report classes as high risk rose from 20 percent in 2022 to 31 percent in 2025. A loan counts as high risk when the buyer borrows 60 to 75 percent of the home’s value and then spends 30 to 40 percent of monthly household income on the repayment. One slice grew fastest of all: loans where the builder quietly subsidizes the buyer’s financing (the “80/20” and “90/10” deals where you pay little now and a balloon later) jumped 18.5 times, from NIS 453 million in December 2023 to about NIS 8.4 billion in August 2025.
The watchdog’s blame lands on the supervisor. He says the Bank of Israel’s banking supervision did not change its rules to match the rising danger, and that a tool it launched in 2022 to help borrowers compare offers, the standard “uniform baskets,” barely gets used: in nearly all new loans (about 98 percent) people took the package the bank offered them, so only about 2 in 100 used the uniform option. The report also notes that four banks hold close to 93 percent of all mortgages, which leaves little real competition. The Bank of Israel rejected the whole report as “unprofessional and strewn with errors and contradictions.”
A second part of the same report looked at property the state itself owns, and found loose management: roughly 6,607 government buildings (about 3.5 million square meters) tracked on a survey that is around 25 years old, earthquake readiness data for only about 20 percent of office buildings, and 57 empty state properties worth more than NIS 100 million sitting unused.
Our math (check it yourself): growing from NIS 300 billion to NIS 630 billion over ten years works out to about 7.7 percent more debt every year, compounded (630 divided by 300 is 2.1, then take the tenth root). And the scary “18.5 times” builder loan number is still small in the big picture: NIS 8.4 billion is only about 1.3 percent of the NIS 630 billion total (8.4 divided by 630). So the riskiest corner is exploding in speed but is still a thin slice of the whole. Both figures are our own calculations from the report’s numbers, not official stats.
Why it matters: if you are taking a mortgage now, the report is a plain warning to avoid stretching your monthly payment past a third of your income and to be careful with builder financed “pay later” deals. For the wider market, a watchdog flagging subprime style risk can push the Bank of Israel toward tighter lending rules, which would cool demand further. For how new lending volume and cancellations have been moving, see our earlier piece on record mortgages clashing with soaring cancellations.
Beit Shemesh just cleared a plan for 66,000 more homes
On the same Monday, June 24, the Jerusalem District Planning Committee approved the policy document known as “BS/3000,” the blueprint that sets how Beit Shemesh grows for decades. It is a big leap. The city sits at about 185,000 residents in 2025, and the document maps a path to more than 500,000.
The plan adds about 66,000 housing units, taking the city’s planned total to roughly 111,000. It also layers in about 2.3 million square meters of new jobs and commercial space (about 2.9 million total), about 1.8 million square meters of new industry, and 750 new hotel rooms. To move all those people, it leans on three transit modes at once: heavy rail, a light rail line, and a bus rapid transit network. Building heights stay modest on the main streets, up to about 9 floors, but designated zones in the south can rise to 23 floors.
One caution worth keeping in mind: this is a policy document being advanced, the framework that detailed building plans must now follow. It is the green light for the vision, not a permit for any single tower, and full build out is a multi decade story.
Why it matters: Beit Shemesh is already a magnet for young and religious families and for new arrivals, and a clear long term growth map tends to pull developers and early buyers in ahead of the homes. If you are eyeing the city, this raises the odds of heavy construction, more supply, and better transit over time, but also years of building sites. For background on the city’s wider growth plan, see our note on the Beit Shemesh master plan and Mishkafim.
Holon’s first “roof agreement” brings 10,700 homes and a new stadium
A “roof agreement” (heskem gag) is a deal between the national government and a city where the state funds the roads, schools, water, and public spaces that new neighborhoods need, so the housing can actually be built rather than stall for lack of infrastructure. Holon, a city of about 200,000 just south of Tel Aviv, is advancing its first one ever.
The numbers the city is putting forward: about NIS 3.1 billion of investment, roughly 10,700 new homes spread across eight plans, between 1.75 and 2 million square meters of commerce and offices, and a new municipal sports complex at Kiryat Micha anchored by a modern football stadium. About NIS 1.1 billion of the total is earmarked for the big “backbone” infrastructure like transport and power. The mayor calls it a historic turning point, and reports point to a signing expected around July.
Read this one with a careful eye. The figures and the framing come mainly from the municipality, with no critical voices yet, and the agreement is described as expected rather than signed. Treat it as a strong plan moving forward, not a done deal.
Why it matters: roof agreements are the difference between approved homes on paper and homes that get built on schedule. For a Holon buyer or investor, state backed infrastructure money lowers the risk that a new neighborhood sits half finished, and a stadium plus offices can lift the value of nearby older homes that are ripe for renewal.
The rest of the day’s pipeline, and the number that ties it together
Beit Shemesh and Holon were not alone. On June 24, Jerusalem’s local planning committee recommended advancing seven renewal plans across the city, together about 2,700 homes. Because Jerusalem renewal is a beat we already track closely, here is just the new slate at a glance:
| Jerusalem plan (June 24) | Homes | Notable |
|---|---|---|
| Talpiot | 1,366 | Four towers up to 50 floors |
| Orion / Hillel St. | 342 | City center |
| Kiryat Menachem | 288 | Renewal |
| Gonenim | 261 | Renewal |
| Ramat Sharett | 248 | Renewal |
| Kiryat Moshe | 222 | Renewal |
The Talpiot towers and Mayor Lion’s wider push are not new ground for us, so for the deeper story see our pieces on the Talpiot skyline towers and the Mayor Lion 30,000 home plan.
Smaller moves filled out the day. The Northern District committee approved depositing a mixed use plan at the entrance to Safed’s Old City, about 23 dunams with roughly 36 homes plus 75 or more hotel rooms and heritage protected commerce. Hundreds of new homes were advanced for Kibbutz Galil Yam near Herzliya. And in the Negev, Arzei HaNegev won a tender for 243 homes in Beer Sheva’s Pisgat Ramot for about NIS 106 million, though a second Beer Sheva tender (117 homes) and five of seven employment plots in Yokneam drew no bids at all, a quiet sign that builders are picking their battles in a slow market.
Our math (check it yourself): add the three big city plans alone, 66,000 in Beit Shemesh plus about 10,700 in Holon plus about 2,700 in Jerusalem, and roughly 79,400 future homes cleared a planning step in one day. That is close to 93 percent of the roughly 85,000 finished new homes that builders already cannot sell (79,400 divided by 85,000). The comparison is illustrative, not equal: today’s number is long term planning that may take decades, while the 85,000 unsold homes are sitting empty right now. Still, it captures the day’s split screen, a flood of future supply approved on top of a glut the market has not absorbed.
Why it matters: Israel keeps approving homes faster than it sells the ones already standing. For buyers that points to more choice and more bargaining room ahead. For investors it is a reminder that an approval is not a sale, and that location and timing matter more than ever. See our coverage of the housing freeze and 20 year low in sales and the truth behind the unsold homes.
Builders on the northern border warn of “white elephants”
A very different story came out of the north on June 25, reported by TheMarker. Construction companies with projects already underway in border towns like Shlomi and Kiryat Shemona say they are being sued for millions of shekels because the war delayed when they could hand over finished apartments. They warn that, without help, some of these half built projects could stall for lack of cash and turn into empty “white elephants.”
What they are asking for is direct support aimed at buyers: government grants for people who purchase homes in the border region, or a VAT exemption to cut the price. Their argument is that the state keeps promising to “invest in the north,” yet ignores the builders who actually bet on it before the fighting. The piece names the towns and the lawsuits but not exact apartment counts or sums, and the claims come from the developers, so treat this as their warning rather than a settled fact.
Why it matters: for a buyer tempted by cheap border town prices, an unfinished project is a real risk, so check the developer’s funding and progress before signing. For the market, this is the flip side of the “northern revival” story: incentives strong enough to rescue these projects could also reset prices across the whole border belt.
A quieter change that could speed up land disputes
One reform that affects anyone who deals with state land takes full effect around the end of June. Israel’s land valuation appeals system is being rebuilt so that arguments over how much the Israel Land Authority charges you (its “appraisal”) get sorted in months instead of years. The Israel Land Council approved the change on December 31, 2025, and gave the system about six months to stand up new committees, which lands the rollout now.
The new setup sorts disputes by size. A demand up to NIS 2 million goes first to a single district appraiser. Cases of NIS 2 million to 10 million go to a district objections committee. Anything above NIS 10 million goes to a top level committee. Each committee has three members, including a legally qualified chair. This is separate from the ongoing fight over who runs the Land Authority itself, which we cover in Israel moves to void its new land chief.
Why it matters: if you are a developer or a homeowner on state land (which is most land in Israel), faster appeals mean projects and deals stop dying in years of valuation limbo. Quicker, clearer rulings tend to lower the hidden cost and delay baked into land heavy projects.
Sources
- State Comptroller mortgage report: Globes (English), en.globes.co.il/en/article-comptroller-warns-israels-mortgage-market-at-high-risk-1001546905; Ynet, ynet.co.il/economy/article/bkzjl2pgzx; TheMarker realestate (June 24); Nadlan Center, nadlancenter.co.il/article/14800. Government assets: Globes, globes.co.il/news/article.aspx?did=1001546867.
- Beit Shemesh BS/3000: Nadlan Center, nadlancenter.co.il/article/14808.
- Holon roof agreement: News08, news08.net; Nadlan Center, nadlancenter.co.il/article/14802.
- Jerusalem seven plans: News08, news08.net (June 24).
- Safed, Galil Yam, Beer Sheva and Yokneam tenders: Nadlan Center, nadlancenter.co.il/article/14804 and nadlancenter.co.il/article/14801.
- Northern border developers: TheMarker realestate (June 25), themarker.com.
- Land valuation appeals reform: Globes, globes.co.il/news/article.aspx?did=1001530722; Gov.il, gov.il/he/departments/Units/appeals_board_israel_land_authority.
