In line with what nhytgbvfeco2 said. Seems to be mostly taxes, shortages, and protectionism. For example, when you buy car, its price has already been inflated by almost 50% due to various commercial import charges. Yet you still have to pay 50% vehicle tax on that inflated price, and then you have to pay 17% VAT on the inflated price plus 50%. That’s right, you have to pay taxes on the taxes you just paid, because your car is now artificially worth more (except only in Israel, not compared to the world). Commercial importers of all types don’t just have to pay taxes on the value of what they import plus tariffs, etc., they also have to pay tax on the insurance they paid on the shipping and the cost of transport. Manufacturers actually in Israel can then raise their own prices up to match everything imported and still be competitive.
For housing, there are shortages nearby where most people have a better chance at making a higher wage, which also happen to be the safest places to live, so the housing prices there get inflated to the point that the higher potential local wage (if you can get it) isn’t really getting you much more than location.
Israel needs the ridiculously high taxes to keep the government running, but the ridiculously high taxes stifle economic growth (that could be taxed in the future). Because of all the import BS, Israeli companies mostly manufacture in other countries, because with all the taxes on importing components and materials and then taxes on exports, they couldn’t be competitive otherwise, so they create way more jobs outside the country than inside. Israel is a major arms exporter for example, but I remember reading something like 70% of what Rafael manufactures is actually in the US in collaboration with Raytheon. Which sounds to me more like it’s being exported from the US.