Housing starts in the first quarter of 2014 were down 16 percent compared with the previous year, the Central Bureau of Statistics reported Thursday. The number of starts declined in every district except Jerusalem, it said.

The numbers will come as bad news for Finance Minister Yair Lapid and Construction and Housing Minister Uri Ariel, who in recent months have pushed a series of programs to incentivize new, quicker construction to help bring down the inflated cost of housing.

Earlier in the week, data from the statistics bureau showed that home sales had fallen 19% in the two months since Lapid announced a controversial plan to eliminate VAT for certain first-time buyers.

Critics had warned that the plan would, among other things, freeze activity in the housing market, as potential buyers waited to see if they were eligible for the benefit.

“This is just the tip of the iceberg,” said Simcha Gridinger, a contractor and chairman of Nativ Development. “We’re talking about a decline in housing starts, even before the announcement of the VAT benefit and target pricing, and we believe that the period of stagnation now will put many contractors on the fence, not only preventing new projects from starting, but also stopping projects already being built.”

Industry sources blamed uncertainty of government policy for the slowdown, saying that builders preferred to wait and see what would happen before embarking on costly projects.

Jerusalem was the only district with a spike in starts, showing a 12.7% rise over the previous year. On Wednesday, Prime Minister Binyamin Netanyahu vowed “to continue to build in Jerusalem and to continue to develop it.”

In the Haifa district, which comprises 8% of housing, starts fell 40.5%. Starts in Tel Aviv, representing 10.9% of housing, declined 1.2%. With a total of 10,341 new starts, the first quarter of 2013 had fewer starts than the corresponding periods over the past three years.

There was a 2.6% drop in the number of dwellings completed. Jerusalem was an outlier, with a 32.6% increase, while completed homes fell 14.5% in Tel Aviv.

A slew of “umbrella agreements” that Lapid and Ariel signed with priority building areas around the country, meant to expedite the building process, seem to have had little impact so far, although they may yet put a bounce in the market further down the line.

According to the Bank of Israel, the overall construction figures for 2013 were good. Continuing construction at the same rate would eventually lead to a decline in prices, which increased 7.1% in the year to March, the central bank said.

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