Despite the government's efforts to increase construction in a bid to reduce housing prices in Israel,
the slowdown in building starts continues. According to figures released Thursday by the Central Bureau of Statistics (CBS), only 20,630 apartments began construction in the first half of 2013 – a 5.9% drop compared to the first half of 2012.
This figure points to a building rate of about 40,000 apartments a year, significantly lower than the accepted target of 50,000 apartments required to meet the growth in the demand for apartments in Israel. It also points to an ongoing slowdown trend in the rate of building starts.
Throughout 2011 there was an increase in the number of building starts, which exceeded 12,000 apartments per quarter. Since the summer of 2011 there appears to be an ongoing decline in the number of building starts, which fell below 9,000 apartments in the last quarter.
On the other hand, there has been an 11.4% increase in the number of apartments whose construction has been completed, likely due to the high number of building starts in mid 2011.
The drop in the number of building starts varies across the country. The central district, which made up about one-quarter of building starts, recorded a 24.8% decline. The northern district, which made up about one-fifth of all building starts, recorded a 7.6% drop. The sharpest decline (28.8%) was seen in Tel Aviv, which made up 11% of all building starts since the beginning of the year.
On the other hand, Jerusalem, which made up about 12% of building starts, recorded a 25.9% increase. The Haifa district, which made up 13.4% of all building starts, saw a 19.7% increase.
A particularly sharp rise in construction - 141.5% - was recorded in Judea and Samaria, which made up just 7.1% of all building starts since the beginning of the year. According to the CBS figures, the construction rate in Judea and Samaria saw a significant increase with 1,461 new apartments built in Jewish communities since the beginning of 2013, compared to only 605 in the first half of 2012.
In response to the figures, the Housing and Construction Ministry said in a statement that "the rate of building starts, a figure we are following closely, went down in the last quarter compared to the previous strong quarter.
"This must be taken into consideration, although the weighted annual rate of building starts in 2013 still stands at some 42,000 housing units in 2013, similar to last year and the high volumes since 2010. The number of apartments in active construction reached a 16-year high in 2013, standing at some 87,300 apartments in the end of the second quarter.
"The shortage of labor in the industry stands out precisely in light of the positive figure of the high number of apartments in active construction in 2013 and the significant construction work, serving as an obstacle for increasing building starts.
"In addition, building starts reflect the extent of local authorities' activity in issuing construction permits. The decline and delays in receiving permits, along with the shortage of labor in the industry, leads to a drop in building starts.
"In order to increase building starts, the Housing and Construction Ministry and Israel Land Authority will work to increase the marketing of lands for housing, and local authorities must prepare for that, alongside activity aimed at completing the moves to increase labor and handling other obstacles like the real estate credit crunch."
Nissim Bublil, president of the Association of Contractors and Builders, said that "the CBS figures prove there is still a serious shortage in the supply of apartments in Israel, with no foreseen solution.
"The drop in building starts continues – the marketing of new apartments is insufficient, particularly in areas of high demand, and there is no solution for the credit problem and the serious shortage of professional workers, which are the main reason for the drop in building starts, as the construction of 40,000 housing units a year will not make it possible to increase the supply of apartments as required."