Uncertainty in the residential real estate sector, following the delay in the 0% VAT plan, and the drop in new apartment purchases in recent months are affecting the volume of building starts. Construction of 9,311 apartments began in the second quarter, down 19.3%, compared with the preceding quarter, and 13.8%, compared with the corresponding quarter last year, according to Central Bureau of Statistics figures published today.
The figures show that the number of building starts in the second quarter was the lowest since the third quarter of 2012, when there were only 9,006 building starts. Breaking the figures down into districts, the number of building starts fell in almost all districts, except for the north, where the number did not change. At the same time, in comparison with the corresponding quarter last year, building starts were down in the Haifa, Tel Aviv, central, southern, and Judea and Samaria districts, while housing starts actually rose in Jerusalem and the north.
The figures for the first half of 2014 also fell sharply. There were 20,850 housing starts in the first half of the year, a 10.7% decrease, compared with 23,365 housing starts in the first half of 2013.
The steepest decline in building starts in the first half of the year, compared with the corresponding period last year, was in Judea and Samaria (an 80% drop). Building starts also fell steeply the Tel Aviv district (20%) and the southern district (17.3%). The decrease in Haifa (8.3%) and the central region (6.5%) were more moderate.
Jerusalem had the most building starts in the first half of 2014 (2,101), followed by Rosh Haayin (1,309) and Tel Aviv-Jaffa (906).
The sales figures for new apartments published at the end of last week indicate a sharp downturn. Only 1,452 apartments were sold in July 2014, 16.6% fewer than in June and 39% fewer than in July 2013. The drop in sales is having a direct effect on building starts, with contractors and developers putting new projects on hold. Furthermore, Israel Land Authority and Ministry of Housing tenders for thousands of housing units have been postponed over the past two months, following Operation Protective Edge, and this is also liable to affect future building starts.
Housing starts totaled 10,341 in the first quarter, down 6%, compared with the preceding quarter, and down 16%, compared with the first quarter of 2013.
Published by Globes [online], Israel business news - www.globes-online.com - on August 31, 2014
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