Report: New Housing Starts in Israel Slumped 16% Year-on-year in Q1

Largest decline was in Haifa (40%), although Jerusalem bucked the trend with 13% increase.

AP

There was a 16.1% drop in housing construction starts in the first quarter of the year compared to the same quarter in 2013, the Central Bureau of Statistics reported Thursday.

The 10,340 construction starts in the first quarter were also 9.5% fewer than the last quarter of 2013. On the other hand, the 93,300 residential units currently in the process of being built are the highest number recorded since the end of 1997.

On a nationwide basis, the number of new homes completed in the first quarter was 9,470, a 2.6% decline compared to the period a year earlier. Beyond the borders of Israel itself, housing starts in West Bank Jewish settlements plummeted by 76.4% in the first quarter of the year compared to the first quarter of 2013, although no reason was offered for the startling fall.

The Central Bureau of Statistics data came a day after the agency reported a sharp drop in the number of new homes purchased in April, with only about 1,600 housing units changing hands. The drop in demand is being attributed to the government’s announced plan to launch a program that would exempt qualifying buyers from value-added tax on new home purchases, as well as another program that would provide land to developers at a reduced price in an effort to boost lower-priced housing stocks. It is thought that buyers are sitting on the fence until these programs are instituted.

The drop in the number of housing construction starts in the first quarter, however, is more difficult to explain, in light of the fact that it was only at the very end of the quarter, mid-March, that the proposals regarding the new programs were publicly aired. It is thought possible that a general mood of uncertainty, along with Finance Minister Yair Lapid’s comment that he would not recommend that his own children buy an apartment today, curbed new construction.

Construction contractors said Thursday they anticipated a continuing sharp decline in housing starts in the months to come, in light of uncertainty in the sector. For his part, however, Housing and Construction Minister Uri Ariel claimed Thursday that housing starts are maintaining what he called “the high pace required by the growth in population.”

The sharpest decline in new housing starts in Israel proper in the first quarter (which does not include West Bank Jewish settlements) was seen in the Haifa district, which saw a 40% drop. The southern district recorded a 23% decline, while the north outside of Haifa saw a 12% slump. Housing starts in the central district, which does not include Tel Aviv, were down by 9%, while the Tel Aviv district reported just a 1% decline.

By contrast, the Jerusalem district recorded a 13% increase in the number of housing starts.

Among individual cities, Jerusalem saw more residential construction starting in the first quarter – 1,252 units – than any other city. The Jerusalem figure is similar to the number for the comparable quarter a year before in the capital. There were 628 housing starts in the city of Tel Aviv in the first quarter of 2014, a 76% increase over the period a year before. Major increases in residential construction starts were also recorded in Be’er Yaakov, south of Tel Aviv (437 units, a 160% increase), and in Ra’anana, north of Tel Aviv (362 units, a 102% increase).