Demand for new homes increased by a preliminary 13.7 percent in October according to a report by the Central Bureau of Statistics, while the latest Finance Ministry figures show that the housing market is weakening.How to explain the apparent contradiction? “The Finance Ministry figures are based on figures from the Israel Tax Authority providing real-time data which show that the average price of a new home has dropped by 6.4% since the beginning of the year,” said Finance Minister Yuval Steinitz. in an interview with The Jerusalem Post which will be published in full next month. The CBS figures, however, “are based on statistics which are collated from surveys and are subject to adjustments and corrections,” he said. Steinitz added that although the increased release of land tenders in recent months by the Construction Ministry is already showing its effect, it’s not enough. This year the volume of tenders has doubled from marketing 15,000 apartments to 30,000.“There has been an increase of 20% in new building starts from the beginning of the year to August,” said Steinitz. “But this is not enough to solve the problem of supply in housing. We need at least 40%. For this purpose, this month we have announced a number of steps to encourage and boost the supply in housing.The construction of new neighborhoods cannot happen within a day or a few months but will take time.However, to accelerate the process we are implementing incentives for contractors and land owners.”Earlier this month, Steinitz, together with Prime Minister Binyamin Netanyahu and Construction Minister Ariel Atias, announced short-term measures the government would take in an effort to ease the sharp surge in property prices and speed up new construction, in order to deal with the shortage in housing.Beginning in 2011, the government will reduce the betterment tax rate on private land bought before 2001 from a maximum of 45% to 20% for a limited period. The government hopes that the measure will encourage the release and sale of some of the 1.9 million dunams of privately-held land, and boost the development and supply of homes.Additionally, contractors will be eligible for a 15% rebate on the price of land tenders issued by the Israel Land Administration if they finish construction of at least 80% of apartments in a project in a period of time of not more than 30 months.“In addition to the presented measures we will announce within a week additional measures with a focus on property taxes,” said Steinitz.Currently the Treasury is also considering measures to encourage and assist the construction of small apartments of three to three and a half rooms which are hard to find today for young families looking to buy a first home.Preliminary figures published by the CBS on Thursday showed that demand for new apartments surged by a preliminary 13.6% to 3,414 homes in October, from 3,005 homes the previous month, compared to 2,928 homes in October of last year. In September, however, housing demand slowed down moderately by 5.3% compared with August.The number of new home sales in October increased by 41.9% to 2,250 from 1,588 in the previous quarter and 1,555 during the same month last year. From August to September the number of new home sales declined by 16.7% from 1,906 to 1,588. From the beginning of the year to October, the number of new home sales rose by 6.4% compared with the same period last year.Contrary to these findings, earlier this week the Finance Ministry published its own housing data which found that in the third quarter of the year fewer home sales were registered compared with both the preceding quarter and the corresponding quarter of last year. Home purchases fell by 19% in the third quarter compared with the same quarter of 2009, and by 11.6% compared with the previous quarter. A total of 23,000 new and second-hand homes were sold in the third quarter, representing the lowest figure for the third quarter since 2006. While in the second quarter of the year home sales were 2% lower compared with the corresponding quarter of last year.In the third quarter, 5,353 new homes were sold showing a decline of 15.3% compared with the same quarter of 2009, and a drop of 1.2% compared with the previous quarter. During the reported period, the number of second-hand home sales plunged to the lowest level since the first quarter of 2009 and amounted to 17,500 – a decline of 20.2% compared with the third quarter of last year, and 14.3% compared with the second quarter of 2010. Similarly, the data showed that purchases of apartments for investments have been dropping since the fourth quarter of 2009. Third quarter purchases fell by 28.4% compared with the corresponding quarter, and were down by 14.9% compared with the preceding quarter.The Finance Ministry attributed the sharp decline in the sales of second-hand homes and apartments for investment purposes to the gradual increase in the base lending rate and the tighter mortgage restrictions introduced by the Bank of Israel in recent months.The Finance Ministry report showed that the average price of new apartments in the third quarter fell by 2.9% in comparison with the second quarter, and by 2% in comparison with the first quarter. The average price of a new home dropped by an aggregate 6.4% from the peak reached in December 2010.