Housing starts fall to two-year low

From April to June of 2014, just 9,311 new starts were recorded, down 19.3% from the previous quarter and 13.8% from the same period the previous year.

By
August 31, 2014 20:20
2 minute read.
General view of Tel Aviv

General view of Tel Aviv. (photo credit: REUTERS)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

In signs that the troubled residential real-estate market is not healing, housing starts hit a two-year low in the second quarter of 2014, according to figures the Central Bureau of Statistics released Sunday.

From April to June of 2014, just 9,311 new starts were recorded, down 19.3 percent from the previous quarter and 13.8% from the same period the previous year. With the exception of the third quarter in 2012, when 9,006 starts were registered, the figures represent the lowest number of housing starts since the second quarter of 2009.

Be the first to know - Join our Facebook page.


Housing supply in Israel has failed to keep up with growing demand, spurred by healthy population growth and rock-bottom interest rates on mortgages.

As a result, the price of housing has soared in recent years, doubling since 2007 and playing a central role in costof- living street protests in 2011.

The Bank of Israel estimates that to keep up with demand, at least 40,000 new housing units would have to come onto the market every year. In the first half of 2014, 19,829 units were completed, down 7% from the same period the previous year.

One possible reason for the drop-off in starts is anticipation of Finance Minister Yair Lapid’s 0%-VAT plan, which would give a heavy discount to some young couples on new-home purchases.

The policy’s fate is uncertain, but many young couples are putting off buying homes in hopes of securing the discount, should it come into effect.

JPOST VIDEOS THAT MIGHT INTEREST YOU:


New-home purchases by young couples dropped 30% in the second quarter, when overall real-estate transactions declined 14%. Alongside the effects of a slowing economy and the war with Hamas this summer, several major real-estate companies, including Z. Landau and U. Dori, are having a hard time, which would partly explain the decline in housing starts.

“A deferral of Israel Lands Authority tenders due to Operation Protective Edge, a closure that prevented the entrance of Palestinian workers, the shutdown of construction sites in the South due to the fighting and the uncertainty related to the application of a zero-VAT rate on new homes can all possibly negatively impact the increase in supply of homes,” the Bank of Israel’s monetary committee wrote in its recent interest-rate decision.

Compared with the first half of 2013, housing starts for the first half of this year fell 20% in Tel Aviv, 17.3% in the Southern district, 8.3% in the Haifa district and 6.5% in the Central district.

Housing starts increased 15.9% in Jerusalem but just 0.5% in the North. New construction in Judea and Samaria fell 71.9%.

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS