Housing Inventory Slumps to Lowest Level in Over a Decade

New neighborhoods are being planned for Herzliya and Tel Aviv, but don't expect cornerstones to be laid down this decade.

Israel's inventory of new apartments for sale has fallen to its lowest level in a decade, which may indicate a future upswing in prices. Only 9,410 apartments were available for sale as of the end of February, nearly 30% less than a year before, the Central Bureau of Statistics reports.

New apartment sales fell by 4% in January-February compared with the same period of 2007, and worse - when the figures for those two months are compared with the two preceding months, November and December of 2007, the drop is 5%.

The only area spared consumer scorn was central Israel, where demand for housing remains as strong as ever. In fact, new apartment sales were 20% greater in January-February than in the same months of last year. However, if Tel Aviv is removed from the figures, then there was a drop of 13%.

The decline in sales was sharpest in Judea and Samaria: 56%. Only 32 new apartments were sold in that region during January and February. Northern Israel saw a drop of 8.8%, the Central Bureau of Statistics says.

Moreover, the number of building starts for housing is also declining.

The Central Bureau of Statistics says that the inventory of new apartments for sale, as of the end of February, will suffice for 27 months in Jerusalem, 11 months in the Haifa area, and about 10 months in the North. In Tel Aviv, the number of new flats for sale will last 11 months.

In the future, the situation should be very different. About 700 new apartments worth a billion shekels in sales terms will be built by the Interdisciplinary Center of Herzliya, albeit not in time to solve the growing crunch. The Tel Aviv District Planning and Building Committee approved the local planning committee plan to build the housing on a 275-dunam area by the center.

The plan also calls for commercial space. Most of the land in question belongs to private individuals, which means that it's going to take a long time before the first cornerstone is laid.

The area in question stretches from the Jewish Brigade Street in the north, Alterman Street in the south, Jabotinsky Street in the west and Kanfei Nesharim Street in the east. If that sounds eerily familiar, perhaps it's because you served there: the land once housed an army base that was closed down in 1994.

The Interdisciplinary Center of Herzliya sits on part of that "demilitarized" land.

It isn't as though Herzliya is short of land for development. In fact it has enough to double the number of apartments in the seaside city to roughly 60,000. Yet new building in the city is rare, in part because of planning problems. Much of the land available for development happens to be contaminated. This is land in the city's north-west and south-east of the city, and used to belong to the Israel Aerospace Industries.

Also, the municipal airport is in the way and its evacuation is being dragged out too. Then there are legal problems regarding the Glil Yam development, which calls for the construction of 3,100 apartments. In short, there will be new housing available in Herzliya, one day. Just not any day soon.

Tel Aviv may also receive a whole new neighborhood: this week the Interior Ministry's District Planning and Building Council approved the plan, which calls for the construction of more than 11,000 new apartments between New Ramat Aviv, the Glilot intersection and the Colony Hotel.