The forthcoming release of the Consumer Price Index, coupled with the rental index, has brought attention to the soaring rental prices in Israel in recent months, despite a downward trajectory in housing prices. The ongoing purchasing crisis has rapidly transformed into a rental predicament.
Yehuda Morgenstern, Director-General of the Construction and Housing Ministry, shared insights in his inaugural interview since assuming office, affirming to Yediot Achronot that “approximately one-third of Israel’s population resides within the rental market. One cannot overlook real estate without addressing rental issues.” He unveiled the ministry’s strategic plan to tackle the crisis, and Matzav.com shares portions of his interview with Yediot in Hebrew.
Almost ten years ago, Israel embarked on addressing the rental market, which included establishing a public entity to oversee long-term rental housing initiatives. The implementation of the Capital Investment Promotion Law facilitated Real Estate Investment Trusts (REITs) to develop extended-term rental projects. These strategies were devised during a period of negligible or very low interest rates.
“The existing condition of the rental market is influenced by elevated interest rates. We’re taking a three-pronged approach to address this situation. First, we’re creating a specialized division within the ministry dedicated to managing the rental market. This unit will centralize operations involving the public entity, governmental decisions, and the free rental market.”
Addressing the challenges of the free rental market, Morgenstern notes, “In situations where interest rates rise, housing prices tend to decline, leading to an inclination for rental prices to surge. We need to identify a solution that maintains at least stable rental prices. We’re collaborating with stakeholders to address a deficiency we’ve identified in the rental landscape: the duration of lease agreements.”
“In Israel, institutional rentals with long-term contracts (linked to an index for 10-20 years) exist, yet in the open market, the average lease lasts merely a year. In recent years, there may have been a slight shift towards two-year leases. However, in global comparison, this remains suboptimal. Our objective is to bring more consistency to renters. I believe landlords also prefer extended contracts, so we’re contemplating incentives to encourage long-term leases. This matter is presently under consideration.”
A potential measure being explored involves providing tax incentives to property owners who offer long-term leases. Another initiative under scrutiny involves a fusion of rental and purchasing options.
Morgenstern’s journey into public service is intriguing and distinctive. At 40, he’s married with six children. Born in Tel Aviv, he later moved to Bnei Brak during his formative years and studied at the Gerer Yeshiva Sfas Emes.

Rather than opting for military service, he pursued civil service, working at Rambam Hospital and within the prison system. At 24, despite lacking a background in core academic subjects, he enrolled in a preparatory program at the Technion, ultimately obtaining a bachelor’s degree in Industrial Engineering and Management from the same institution. Subsequently, he earned a master’s degree in the history of Israel and Judaism from the University of Haifa.
Throughout his academic journey, Morgenstern managed the chareidi campus of the Carmel Academic Center in Haifa, increasing student enrollment from 70 to 250 within two years. At 29, he established Telem, a company dedicated to enhancing economic and social prospects for the chareidi community, serving as its CEO for four years. Telem currently manages projects that integrate chareidim into various academic settings, supporting approximately a third of chareidi students in academia.
Morgenstern also contributed as a research fellow at the Shmuel Neeman Institute for National Policy Research. In 2018, he became the deputy CEO of the Bnei Brak Economic Company, where he oversaw budgets totaling hundreds of millions and supervised numerous employees. By 2020, he had served as a director at Tel Aviv-Yafo’s water corporation Mei Avivim.
He is committed to integrating the chareidi community into the Israeli workforce and broader societal fabric. However, he exercises caution when positioned as a symbol for this cause. While candid about his personal journey, his role necessitates him to steer clear of politically sensitive topics related to secular-chareidi relations.
“The choice to engage in civil service stemmed from my realization that I wanted to work. I was already married with children. Military service, for various reasons, wasn’t feasible for me, and I sought an alternative to contribute to society. This avenue allowed me, as a chareidi individual aspiring to work, to achieve both.”
Regarding the core curriculum issue, Morgenstern offers a circumspect response: “I lack the authority to mandate a core curriculum. Many subjects, rather than being treated as technical matters, have assumed symbolic significance. Delving into this subject can lead to entrenchment, and Newton’s third law applies—every action has an equal and opposite reaction. It evolves into an ideology, transcending mere technicality.”
“The imperative is to have diverse representation at the table— chareidim, Arabs, Mizrachim, Ashkenazim, from central and peripheral regions, encompassing both genders.”
“On a personal level, I’m often asked for guidance on whether to pursue studies. Which life path to choose? My answer is personalized. Was my journey effortless? No, but was it achievable? Absolutely. In fact, thousands of chareidim make this choice annually, with tens of thousands having done so over the past two decades.”
“How crucial is it for chareidim to integrate into academia and the labor market? The more people like me and my peers—who have traversed this process while remaining chareidi yet gaining an additional layer of identity that equips them for the system, whether in business or the public sector—the more I unequivocally encourage others to follow this path. It’s not just right for me and my friends; it’s right for us as a society.”
“Having a diverse representation at the table is an imperative— chareidim, Arabs, Mizrachim, Ashkenazim, individuals from central and peripheral regions, and both genders. This diversity is our aspiration. Today, the importance of diversity is widely understood, not solely for corporate responsibility but also because it ultimately bolsters productivity in both the business and public sectors.”
Morgenstern reflects on integrating as a chareidi into a secular institution like the Technion, sharing a light-hearted anecdote: “During a Technion event celebrating former President Shimon Peres’s 90th birthday, I shared that when I entered the Technion’s café one day, they mistook me for the kashrus supervisor. It’s a playful incident. Generally, there was an understanding and acceptance of me, socially and within the faculty and staff.”
While at the Technion, Morgenstern realized that he possessed a broader understanding of the world outside the chareidi community than others had of him. He made it a point to encourage questions and foster an environment of openness, believing that this fosters trust.
At the Technion, he had a teaching assistant who was a skilled graduate from the naval academy. The assistant aided him with equations containing unknown variables. Morgenstern questioned his decision to not pursue a high-tech career and received an answer that became a guiding principle: “Yehuda, when you possess a talent, you utilize it—not because you can, but because you must.” This motto continues to guide him.
In the Chassidic community, work is a common practice, although academia may have been less familiar at the time. Morgenstern sought brachos from rabbonim, who supported his decision. Upon completing his studies, he received reassurance from a consulted rov, affirming that his chosen path was successful.
Morgenstern was appointed Director-General of the Housing Ministry in January under the leadership of Minister Yitzchak Goldknopf, the chairman of the United Torah Judaism party.
Commenting on his collaboration with the minister, Morgenstern emphasizes, “Not every minister needs to bring prior knowledge; they need to learn. Even as a director-general, there are things I continue to learn. I prefer to have individuals around me who possess more expertise.”
“The minister formulates policy, encourages us to attain goals, ensures the diversity of our solutions, and urges us to address any shortcomings. We engage in brainstorming sessions, present our plans, and he refines them. Our purpose is to achieve outcomes, exemplifying the healthy dynamic between a minister and a director-general. Ultimately, the minister’s involvement extends to ministerial committees that cover areas beyond my purview—fortunate for me.”
While the rental market has been discussed, many still find homeownership financially unattainable, despite the downward housing price trend. Morgenstern discusses the approach to this issue: “I consider my relatives and contemplate how they’ll afford an apartment. Various factors over the past two decades have contributed to price increases. Even if we offer land at no cost, construction expenses have risen by a minimum of 30% compared to a decade ago. Consequently, even if the land’s value is negligible, an apartment will still surpass one million shekels. The solution lies in significantly augmenting supply.”
Morgenstern predicts that the downward trend in apartment prices will persist. He envisions an increase in annual marketed apartments, estimating over 100,000 units by 2025, bridging the demand-supply gap.
Addressing the challenge of promoting projects in the face of opposition from local authorities, Morgenstern acknowledges, “Indeed, there’s often discord between our goal of marketing numerous apartments and local authorities’ capacity to accommodate new residents. A notable disparity emerges concerning roads, classrooms, and sewage treatment facilities. We’re collaborating with the Transportation Ministry, and we possess a joint plan amounting to NIS 4.5 billion for housing-supporting infrastructures. It’s important to recognize that budgets are finite, so we strive for the most effective allocation.”
“Our housing cabinet is committed to advancing urban renewal in outlying areas. Convincing everyone to reside outside high-demand regions poses challenges. The belief that construction should occur exclusively in the periphery or only in central areas has evolved into a consensus favoring both. There’s no universal remedy; a variety of solutions, like umbrella agreements, must be offered. We’ve been tasked with formulating an incentive package for local authorities within the cabinet, encompassing benefits and obligations. For instance, if a local authority struggles to issue a building permit within a year, the latest regulatory law empowers the Interior Minister to transfer the decision to the National Licensing Authority. Additional collaborative measures will be presented in the forthcoming cabinet meeting.”
{Matzav.com Israel}