Are Israelis Giving Up the Dream of a House With a Garden?

Building starts within Green Line down as paucity of land and high construction costs force people into apartment blocks

Nimrod Bousso
Nimrod Bousso
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There's an increasing presence of illicit money in Israel's real estate industry.
There's an increasing presence of illicit money in Israel's real estate industry.Credit: Nimrod Glickman
Nimrod Bousso
Nimrod Bousso

Are changes in environmental and social conditions leading Israelis to change their dreams when it comes to housing? While building starts in general declined by 8% in 2014 compared with the year before, construction of one- or two-family houses is at a six-year low, according to the Central Bureau of Statistics.

Building starts in general dropped from about 47,000 in 2013 to about 44,000 in 2014, the bureau’s figures show.

It’s too soon to say whether Israelis are abandoning the dream of living in a house with a garden, and whether it’s because of change in tastes or economic imperative. But the statistics leave no doubt about the trend. According to the stats bureau, in the last six years, the number of building starts on houses has been shrinking both in absolute terms and in proportion to all housing units.

In 2009, construction began on 15,400 houses, constituting a cool 45% of all residential building starts that year. In 2012, the number fell to 14,980 (36% of all residential business starts), then to 14,140 in 2014 (34% of all residential building starts).

Where are these building starts of houses? Mostly in Jewish settlements beyond the Green Line – some 600 in the West Bank – and in Arab villages within Israel, according to the data. Three out of eight of the towns with the highest number of house starts in 2014 were Arab towns. For instance in Rahat, the Bedouin town in the Negev, there were about 300 starts on houses in 2014; in Sakhnin there were 220 and in Jadeidi-Makr, east of Acre, there were 140 last year.

Starts on houses in Jewish towns within the Green Line are almost entirely in the periphery, where house construction has been growing.

Building a house in Be’er Sheva

Take Be’er Sheva, which has the most starts on houses in a breakdown by city. In 2014, construction started on no less than 308 single- or two-family houses. That was half of all residential building starts in Be’er Sheva last year. In 2013, the number of house starts in Be’er Sheva was 146, and in 2011 it was 92.

The increase could be pursuant to the Be’er Sheva municipality’s policy of improving the supply of quality housing, given other huge changes the region is undergoing, not least the establishment of a high-tech park that already has 1,000 engineers working there. There’s also the massive project to move army bases from central Israel to the Negev by the end of the decade, which will mean thousands of career soldiers moving there.

We must also distinguish between private individuals building a house and developers building a whole neighborhood of houses. Contractors are the ones who are scaling back building starts of houses: Construction by individuals is more or less steady over the years, between 5,600 to 6,200 starts a year, says Israel Pasternak, director of the Israeli Building Center. The figures, he qualifies, are based on analysis of data from the Israel Lands Administration.

Each year between 4,500 to 5,000 families take courses on how to build a house at the Israeli Building Center – the number is fairly steady, Pasternak says. Also, while once people tended to build houses outside the cities, for instance in moshavim and kibbutzim, construction within the cities has been increasing. For instance, more houses are going up in Hod Hasharon and Rishon Letzion, he says.

Meanwhile, as said, contractors are building fewer houses. Ofra Hadad, CEO of Euro-Israel, which is currently building three projects, attributes that to ILA policy. It’s simply selling less land for neighborhoods of houses. “There are no land reserves in prime areas anyway,” she says, presumably with mourning, since she also notes that projects of the kind are easy to build and profitable. Euro-Israel is current involved in building the Buchman neighborhood in Modi’in, projects in Pisgat Ze’ev near Jerusalem, and in Netivot.

In prime areas, given the paucity of available land, what contractors build is residential towers, not single-family houses. In the West Bank it’s a different story, says Zvi Fuchs, owner of Z.F. Building Company: There’s plenty of work, certainly for smaller companies that build that sort of thing. Z.F. is presently building 100 houses in Nili, the same in Karnei Shomron and 60 in Efrat. “Most of the construction is beyond the Green Line, but near it,” Fuchs says.

According to Pasternak, the cost of building a 200-square meter house with two floors runs between 1.05 to 1.1 million shekels, not including the land; that works out to 5,200 to 5,500 shekels per built-up square meter. Building a cellar costs 200,000 to 250,000 shekels and a pool of 3 to 8 square meters adds 160,000 shekels. An elevator inside the house will cost 110,000 shekels and a smart electricity system will set you back 65,000. And finally, a stone façade will cost about 170 shekels per square meter.

Next week the Israeli Building Center will be holding an international design exhibition at the Tel Aviv Exhibition Center, where products and accessories for the home will also be shown.

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