The pace of construction in Israel is declining, and the number of residential building starts in the first quarter of this year was 25% lower than in the corresponding quarter last year. This is one of the steepest declines in recent years, of a similar order of size as the declines recorded following the social protests of 2011 and the Second Lebanon War.
The city with most building starts is Tel Aviv, despite the sharp decline in home purchases there. This is attributable to a large number of urban renewal projects in which apartments have been pre-sold, and developers are therefore committed to them
The slowdown in the real estate sector, with transaction numbers down 40%, has led to a substantial rise in the number of unsold homes held by contractors. If people aren’t buying hoes, developers can’t sell them, and reduce building starts. In the first quarter of 2022, construction began of some 20,000 new homes, a decades-long record, but the first quarter of 2023 put the building industry back years, with 15,000 starts in the quarter, and a high chance that the number will fall further as the year wears on, especially if interest rates continue rising and home purchases continue to decline.
Published by Globes, Israel business news - en.globes.co.il - on June 20, 2023.
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