Despite housing efforts, construction starts drop 7.9%

The number of housing-construction starts in 2014 dropped 7.9 percent, according to data released by the Central Bureau of Statistics Tuesday. The figure could have repercussions for an election focused on socioeconomic issues. Countrywide, construction began on 43,620 apartment units, a figure that is roughly in line with what the Bank of Israel thinks is necessary to fill the shortage in housing supply that has led to the spike in home prices in recent years. Yet, the downward trend indicates that efforts by the previous government to boost supply, the central element for bringing down prices, have not yet borne fruit, particularly in high-demand areas. In particular, starts in Tel Aviv dropped 17.3%, while those in the Center fell 6.5%. Jerusalem, on the other hand, saw a 9.6% increase. Moshe Kahlon's Kulanu party slammed former Finance Minister Yair Lapid, who created and headed the housing cabinet, over the figures, calling him a “failure” and blaming him for creating “one of the worst social catastrophes since the founding of the state.” “Lapid's program is a joke that cost us all dearly,” the party wrote in a statement, noting that the average price of an apartment rose NIS 160,000 over his tenure. “On such dramatic issues, we cannot give a second chance to those who caused such serious damage.” The Construction Ministry, which is headed by Bayit Yehudi's Uri Ariel in the outgoing government, argued that the numbers would be revised upward as new data comes in, saying it expects the final number to settle at 47,000 starts, about a 1.6% decline. “All this despite Operation Protective Edge and the zero- VAT program,” Ariel said. The zero-VAT program was Lapid's signature housing proposal, which threw a wrench into the market between March, when it was announced, and December, when the election was called, and it fell of the agenda as many young couples hoping to receive a discount from the law put off purchases in the interim, slowing the market and in some cases delaying developers' building plans. Ariel also pointed to his target pricing scheme, which officially launched on Tuesday and will build inexpensive apartments that can be sold to a lucky set of buyers who meet certain criteria and win a lottery. On a cheerier note, housing completions increased 5%. A 2012 Bank of Israel report assessed that the regulatory process stretched the timeline for getting new units onto market was 13 years, only two years of which are devoted to actual construction. The figure has likely declined somewhat since then, and the increase in housing completions may be an indication of quicker passage through the process. Alternatively, it simply could reflect the increase in starts several years back. In Rosh Ha'ayin, the site of one of the Umbrella Agreements for speeding along the process of building, starts soared 107.5%.

Despite housing efforts, construction starts drop 7.9%

All in all, construction began on 43,620 new apartment units.

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Despite housing efforts, construction starts drop 7.9%

All in all, construction began on 43,620 new apartment units.

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