Report: Construction Slows, Despite New Government Efforts

Construction work on new homes outside Afula. Photo by Nati Shohat/Flash90

Although the Finance Ministry had set a goal of 60,000 housing starts for 2017, fewer than 50,000 new homes were under construction over the past year – the lowest number since 2014. Housing experts who spoke to The Marker said that 50,000 is the minimum number of new homes needed to keep up with new demand, without even alleviating the current demand, for which there are not enough apartments.

Through the third quarter, The Marker said, based on Housing Ministry data, housing starts were off 11 percent over the number in the first three quarters of 2016. Construction was down in all areas of the country, except for the Haifa district and several areas in southern Israel. There were only a few cities in which housing starts were up, among them Ashkelon and Kiryat Motzkin, where construction was up 56 percent and 53 percent respectively, this year as compared to last.

Perhaps coincidentally, both those cities are prime construction sites for projects in the Price Resident program. Under the Price Resident program, the state provides discounts on land for contractors who commit to building a portion of the apartments in a project specifically for the program, and they are marketed at a discounted price to young couples and others who do not own homes.

To qualify to purchase an apartment under the program, candidates apply and are chosen by lottery. Housing starts were also up in Rishon Lezion (69 percent) and Haifa (28 percent), both of which are also dotted with new Price Resident projects. Indeed, more than half of the new homes built in 2017 were in peripheral areas of the north or south in Price Resident projects, while on average, fewer than 45 percent of new homes are built outside the center of the country.

Finance Minister Moshe Kahlon, a prime proponent of Price Resident, has said in numerous speeches that the country needs many more apartments in order to bring prices down – and that the programs he is implementing now will result in the construction of a million and a half new homes by 2040. The goal set for 2017 was 60,000 new homes, and Kahlon expects 62,000 to be built each in 2018 and 2019, the report said.