A recent report by the Israeli Ministry of Housing revealed a 15% decline in new construction, which indicates a stagnation in the real estate market that has put pressure on both supply and demand.
Data issued by the Israeli Central Bureau of Statistics indicate that while demand for new and existing apartments continues to decline steadily, the supply side is also at a complete standstill, with a significant decline in construction operations. Last October, the number of transactions fell Apartments increased by 54% compared to the same month in 2022, which the Jerusalem Post considered a worrying matter.
The report shows that the construction of 61,620 apartments was initiated from October 2022 to September 2023, a decrease of 14.4% on an annual basis, but the total construction work, after writing off the demolished apartments, amounts to about 57,650 units.
The newspaper stated that these numbers do not fully reflect the impact of Operation Al-Aqsa Flood and the war on the Gaza Strip, which led to a greater slowdown in the construction sector since October 7.
The most active cities
Geographically, the city of Tel Aviv and its suburbs accounted for about half of the new construction operations, at 24.3% and 22.9%, respectively, and the largest share was for the highest cities according to this narrative:
- Tel Aviv – Jaffa 5907 apartments.
- Jerusalem 4012 apartments.
- Bat Yam 2548 apartments.
- Ashkelon 2082 apartments.
- Lod 1999 Apartment.
- Other notable cities that saw an increase in construction compared to last year include Nazareth, Raanana, Kiryat Gat, Haifa and Ramat Hasharon.
- In contrast to last year, construction increased in Tiberias, Netivot, Herzliya, Afula, Or Yehuda, Nahariya, and Hadera.
And he confessed Tzachi Sovrin Vice Chairman and controlling owner of Sovereign Group, with a decline in construction in IsraelHowever, he stressed the status of Tel Aviv, anticipating an increase in demand due to its distance from conflict areas.
He called on the government to take faster action to address the challenges facing the construction industry, including the shortage of workers.
Rentals
It is noteworthy that a recent opinion poll conducted by the We Check website showed a 50% increase in the supply of apartments available for rent in Israel and a 1.5% decrease in rents since the Al-Aqsa flood operation and the war on the Gaza Strip.
Many apartment owners who had been renting their units for short periods before the process initiated by the Palestinian resistance have now made them available for regular rent, as delaying the start of the school year has contributed to an increase in supply and a decrease in demand for rental apartments.
Owners of apartments that do not include a shelter (from resistance missiles) are forced to reduce the rent as people move away from them, according to what was indicated by the Israeli economic newspaper “Globes”, which quoted part of the survey.