Housing Starts in Israel Grew in First Half of 2015, but Slumped in Last Six Months

Overall, there were 47,700 new housing units last year, 3.9% more than 2014 - but number of housing units completed last year fell by 2.8% to 43,400 units.

A construction site in Tel Aviv.
Nir Keidar

While the government has set a goal of boosting housing supply in order to drive down housing prices, newly released data give the government mixed marks in its efforts. During the second half of last year, following the installation of the current government in May, there was actually a decrease in the number of housing starts compared to the first two quarters of 2015, according to the Central Bureau of Statistics.

Overall, there were 47,700 new housing units last year, 3.9% more than 2014. On the other hand, the number of housing units on which construction was completed last year actually fell by 2.8% to 43,400 units.

The data were published in a preliminary summary of residential construction starts and the completion of construction published on Wednesday by the Central Bureau of Statistics. “There was an average decline per quarter of 4.7% in the last two quarters of 2015, after an average increase of 3.2% per quarter in the three prior quarters,” the government statistics bureau report noted.

The geographic distribution of the housing starts revealed that in areas of the country in which housing demand has been highest, there was actually a decline in housing starts, while in the north, the number of new building starts soared.

In the central district, for example, which includes the entire center of the country other than Tel Aviv and its immediate suburbs, there was a decline of 11% to 11,900 units begun for all of last year, compared to 13,300 units in 2014. In the Tel Aviv district, which includes the city’s inner suburbs, there was indeed an increase in building starts, of 8%, from 6,500 units to 7,000, but in both years the number of housing starts in the district was relatively small.

In the Jerusalem district, the number of housing starts in 2014 and 2015 as almost identical, rising from 4,800 units to 4,900. In the north, there was a 48% increase in residential building starts to 6,600, while in the south, there was a 7% increase, with construction on 9,600 units begun last year.

On a city-by-city basis, in actual numbers, Jerusalem led the pack in housing starts last year with 3,230 units, followed by Tel Aviv with 2,320, but in both cities that represented a decline from the year before — of 9% in the case of Jerusalem and 3% in Tel Aviv. But perhaps most surprising was the city with the third largest number of housing starts last year. It was the northern town of Afula, with 1,530 housing units begun, and that represents a whopping 151% increase over 2014 and a record number of starts in the city.

Although the Tel Aviv suburbs of Ramat Gan and Petah Tikva did not show notable increases in housing starts, the actual numbers of starts there remained significant, at 1,489 in Ramat Gan and 1,471 in Petah Tivka.

“Afula has been working for a long time now on establishing itself as the next metropolitan area, with unprecedented accelerated development,” said the city’s mayor Yitzhak Meron in response to the new figures. “To meet the demand, we are gearing up for plans to build thousands of additional housing units,” he said, “which will substantially increase the city’s population in the coming years.”

For his part, Ohad Saban, vice president at the Dona Engineering and Construction, placed the blame for the decline in housing starts in some areas upon the Israel Land Authority for what he claimed was the slow pace of the bidding process on land that was being freed up for construction.

When it comes to some of other cities around the country, housing starts in Beit Shemesh, west of Jerusalem, increased nearly as sharply, at 124% and in Ashkelon, on the south Mediterranean coast, they were up 65.5%. In Be’er Sheva, there was a jump of 7.7% to 657 units. And in Rishon Letzion, there was a 16% increase, to 922 units. By contrast, the number of residential construction starts was down 15% in Haifa, to 943 units. In Netanya there was a modest decline of 1% to a still substantial 1,229 units.