Israeli election: Netanyahu allows record settler home builds as ordinary Israelis face shortages

Israeli Prime Minister Benjamin Netanyahu's election campaign has suffered a major setback three weeks from the vote, as an official watchdog released a damning report accusing his administration of failing to address a massive housing crisis badly affecting Israel's middle class.

State comptroller Joseph Shapira said the government did little to address the issue of soaring house prices that, fuelled by a shortage of apartments in recent years, now threatens to damage the whole Israeli economy.

The report could prove highly damaging for Netanyahu, as it touches on the electorate-sensitive issue of cost of living at a moment when his Likud party is neck-to-neck with the centre-left coalition Zionist Union in opinion polls.

From 2008 to December 2013 house prices in Israel skyrocketed by 55%, with rents also going up by 30%, according to the 294-page report.

Over the same period, the share of a person's average monthly salary spent on rent leaped from 29% to 38%, while wages went up at a way slower rate, making it increasingly hard for families to put aside savings to buy a property.

"The burden of housing expenditure may have far-reaching implications for the life and well-being of the individual, and his economic robustness. If these trends continue, they could adversely affect the whole economy," said Shapira, according to Ynet.

Netanyahu took over from Ehud Olmert as prime minister in March 2009 and has remained in the post ever since.

The report says that both the Olmert and Netanyahu administrations failed to properly address the crisis, the roots of which are to be found in a lack of house supply.

It came days after a separate report underscored how, while apparently neglecting the housing shortage at home, Netanyahu's government has overseen a boom in the construction of illegal settlements in the occupied west bank.

According to left-leaning group Peace Now, a 10-year-record of 4,485 tenders for residential units in the settlements and East Jerusalem was published in 2014, with the construction of 3,100 homes being started in the same period.

Israelis will vote in the general election on 17 March. According to a Knesset Channel poll released this week, Netanyahu's Likud party and the Zionist Union are currently in a tie, as they are both expected to win 24 of the Knesset's 120 seats.

According to another survey by Haaretz newspaper, more than 20% of voters are still undecided.