Recent economic growth indicators are starting to show signs of a recession but real estate prices are still set to rise during the coming year because although demand is falling supply is falling faster. During the month of January the Israeli index of leading economic indicators, fell by 1.2 percent the sharpest monthly drop ever, while in the last quarter of 2008 gross domestic product contracted by 0.5% adding to growing signs that the economy is falling into a recession. Housing starts are at a minimum and according to figures released by the Association of Contractors and Builders in Israel the supply of new apartments will dry up by September -October of this year. "The supply situation is nothing less than catastrophic. The number of new apartments available to the general public is at on all time low and falling," Yossi Gordon, general manager of the association said in an interview with The Jerusalem Post. "Housing starts have been falling for the past five years and I very much fear, that housing starts this year will be at the low end of our expectations and hover around 20,000 units. These figures have a very negative bearing on the amount of residential units, "on the shelve" for sale. At the end of 2008 there were 9,868 such apartments compared to 10,990 in 2007. By the end of 2009 the number of available apartments may well fall to zero". The expected rise in real estate prices and the rapid dwindling of available housing is based on an in depth survey by the Chartered Accountant firm of BDO-Ziv -Haft, which mapped the number of available new apartments in Israel, and their location. The numbers are dismal. In Jerusalem the number of new available apartments at the end of 2008 amounted to 1,179 a fall of 12.3% compared to 1,345 at the end of 2007. While in the southern districts of the country, the number of available new apartments has fallen by 33.6% to 1,077 apartments. In northern cities of Tiberias, Safed and Acre as well as in the centrally located cities of Yavne, Yahud, and Ramla there are no new residential units available, while in Beersheva there are only 51 new residential units left . In Haifa the country's third largest city, only 150 new apartments remain un-sold a fall of 23.6% are left unsold. The situation is similar across the country around Petah Tikvah, Herzeliya and Givataim availability of new apartments by the end of 2008 were down 35% compared to the end of 2007. Most real estate experts believe that the supply figures will exert upward pressure on prices, but despite low housing availability the price levels will be determined by demand. If the current recession deepens and demand for residential property were to fall below 15,000 residential units prices will probably hold steady and may even fall slightly. If demand goes beyond that prices will probably rise. But the chances of demand dropping below 15,000 is remote. "According to our estimates 37,000 new households are added every year. And since they need a roof over their heads annual demand for housing is at least around 37,000 units," said Gordon. "Even in a recession couples get married and leave the parental nest and new immigrants keep coming. In consequences I very much doubt whether the construction industry in 2009 will be able to meet demand."