Housing construction hits 10-year high

75,000 apartments were under construction in the second quarter of 2011, the largest number since 2001, the Central Bureau of Statistics reported today.

There were 21,980 housing starts in the first half of 2011, 15 percent more than in the first half of 2010, and 6% more than in the second half. The apartments under construction will reach the market over the next few years, and help push down prices, according to the Construction and Housing Ministry.

There were 10,810 housing starts in the second quarter, the fourth consecutive quarter of growth.

However, the number of housing starts fell 2.5% from 11,169 in the first quarter. 31% of the housing starts were private or semidetached houses.

Housing starts were up 55% in the first half, compared with the corresponding half, in the southern district, up 29% in the Tel Aviv district, up 11.7% in the Haifa district, and up 9.3% in the central district. Housing starts were down 11% in the northern district and down 8% in the Jerusalem district. There were no housing starts in Judea and Samaria, due to the government’s construction freeze.

Housing completions totaled 16,830 in the first half, 3% more than in the corresponding half.

However, Association of Contractors and Builders in Israel CEO Motti Kidor believes that there will be fewer housing starts in the coming quarters, despite marketing campaigns and the new national housing committees, because the banks have frozen financing for the construction industry and contractors are struggling to obtain credit.

The tent protest has contributed to the trend, since the drop in housing demand exacerbates the problems in obtaining credit.

Kidor said that the figures indicate a worrying trend in the construction industry.

“The Central Bureau of Statistics reports 8,428 housing completions in the second quarter, compared with 8,407 completions in the first quarter. Taking the number of housing starts into consideration, this is a very low figure. In a healthy industry, there should be an increase in housing completions, but the severe shortage of skilled workers lengthens building times for residential projects.”

Kidor added, “The residential construction industry currently employs only 5,500 foreign workers.

Two months ago, the government decided to raise the quota of foreign workers for the industry, but not a single worker has actually been provided. We fear that the slowdown in housing starts and shortage of workers will further raise prices in the long term because the gap between housing starts and the increase in households needing a roof over their heads will remain.”