Israel’s housing crisis is being driven by a massive gap between skyrocketing apartment prices and lagging household incomes, according to a study released Wednesday by the Shoresh Institution for Socioeconomic Research.

While apartment prices in Israel surged by approximately 130 percent between 2000 and 2022, net household income rose by only 45% during the period, the report found. The rise in average rental prices was more in line with wage increases, rising by 40% during this time.

The study, authored by researcher Yael Mishli, found that home prices are being driven upward by a persisting shortfall in the supply of homes, with the crisis aggravated by construction failing to match a demographic shift in which household numbers have outstripped population growth, pointing to unmet demand for smaller units.

Calling this a “deep structural failure,” the study called for major policy changes to right a housing market long plagued by low supply, a problem primarily driven by a centralized, fragmented planning system and burdensome licensing requirements that result in years of administrative delays, according to the report.

The Housing Ministry did not reply to a request for comment.

With ballooning prices putting home ownership out of reach, many are continuing to rent homes into middle age, though in the past, this was seen as mainly a temporary measure for young people. While in 2001, only 10% of five-person households lived in rentals, by 2022 that share had risen to 20%, a trend seen across nearly all household sizes and age groups.

Though rental prices have risen less sharply than home costs, paying rent still constitutes a major........

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