The pace of construction in Israel is declining, and the number of residential buildings started in the first quarter of this year was 25% lower than in the corresponding quarter of last year. This is one of the largest declines in recent years, on the same order of magnitude as the declines recorded in the aftermath of the social protests of 2011 and the Second Lebanon War.
The city where most of the construction has begun is Tel Aviv, despite a sharp decline in home purchases there. This is due to a large number of urban renewal projects in which apartments have already been sold out, and therefore developers are committed to them.
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A slowdown in the real estate sector, with transaction numbers down 40%, has seen the number of unsold homes owned by contractors skyrocket. If people don’t buy hoes, developers can’t sell them, and less construction starts. In the first quarter of 2022, about 20,000 new homes began construction, which is a record for decades, but the first quarter of 2023 has set the construction industry back, with 15,000 homes starting in the quarter, and a great chance that the number will decrease over time, especially If interest rates continue to rise and home purchases continue to decline.
Published by Globes, Israel business news – en.globes.co.il – on June 20, 2023.
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