58,500 apartments began construction in the past 12 months, reflecting a 10% decrease compared to the previous year and marking the first annual figure in years below 60,000. There was a 14% decrease in completed construction during Q3. Jerusalem leads with about 6,000 housing starts over 12 months. There is a surge in the construction rate in Ofakim and a sharp decline in Rishon Lezion and Bat Yam.
By Doron Breitman, Nadlan Center
A worrying sign for the construction industry: The annual housing start rate has fallen below 60,000 units for the first time in a long while. Between October 2023 and September 2024, only about 58,500 apartments began construction. This figure is nearly 10% lower compared to about 64,800 units in the preceding 12 months (Oct ’22 to Sep ’23) and about 20% lower than the 73,300 units started between Oct ’21 and Sep ’22.
In Q3 2024 alone, about 16,900 apartments began construction, reflecting a 9% drop compared to the same quarter last year, when the number stood at about 18,600 housing starts. During this quarter, construction of about 12,100 apartments was completed, a 14% drop in the rate compared to about 14,000 completed in the corresponding quarter last year.
Net housing starts over the past 12 months totaled 53,400 units, after accounting for about 5,060 existing units demolished. At the end of September 2024, the number of active construction units was approximately 178,100.
Building permits issued in the last quarter totaled about 20,000, marking a 20% increase compared to the previous quarter and a 2% decrease compared to the same period last year. Over the past year, the number of building permits issued was 72,180, a 2.3% decline compared to the preceding 12 months (October 2022–September 2023). Since the “Operation Swords of Iron” outbreak, a 50% rise was observed in permits for adding safe rooms (mamad) to existing apartments.
Surge in Ofakim Construction, Decline in Bat Yam
A regional breakdown reveals that a quarter of all housing starts occurred in the Central District (23.4%), with approximately a fifth in each of the Tel Aviv (19.9%) and Southern Districts (18.7%). Additionally, 15.5% of housing starts were in the Northern District, 10.9% in the Jerusalem District, 10.3% in the Haifa District, and 1.3% in the Judea and Samaria Area.
A city breakdown shows Jerusalem leading with 5,790 housing starts in the past year. Following are Tel Aviv-Yafo with 4,817 units, Ashdod with 2,541 units, Lod with 2,510 units, and Netanya with 2,192 units.
Compared to the preceding 12 months, Ofakim saw a 140% rise in housing starts, from 644 units last year to 1,547 this year. Significant increases were also recorded in Tiberias (101.5%), from 543 units last year to 1,094 units this year, Acre (108%), from 355 units last year to 738 this year, and Kiryat Ono (90.6%) from 652 units to 1,243 this year.
Conversely, significant declines in the construction rate were noted in Bat Yam (61.9%) from 2,645 units last year to 1,007 units this year, Rishon Lezion (48.2%) from 1,689 units last year to 875 units this year, and Netivot (45.6%), where housing starts dropped from 1,725 units last year to 939 this year.
The data also shows that approximately 70.6% of housing starts were intended for sale, with about 10% under government subsidies (about 4,110 units). The Southern District led in government-subsidized housing starts with approximately 1,180 units (28.6% of the total). Following was the Central District, with 940 units (22.8%). About 29.4% of housing starts were not intended for sale, including 67.6% through self-construction, 18.6% through combination deals, and 6.8% for rental purposes.
More than Half of Demolition and Reconstruction Projects in the Tel Aviv District
In Q3, 3,225 apartments began construction resulting from the demolition of existing buildings and the construction of new ones, with 75% under TAMA 38/2. This reflects an 11% increase in the construction rate compared to the previous quarter but a 20% decrease compared to last year’s period.
Over the past 12 months (October 2023–September 2024), about 14,150 apartments began construction through demolition and reconstruction, marking a slight 3% increase from the preceding 12 months. Over half of these apartments (50.9%) were built in the Tel Aviv District and 25.3% in the Central District.
Additionally, about 3,700 apartments began construction as additions to existing buildings, an 18% decline in this sector. About 27.9% of these units were in the Tel Aviv District and 21.6% in the Northern District. Approximately 46.6% (1,730 units) were built under TAMA 38.
Decline in Completed Construction
Regarding completed construction, about 12,000 apartments were completed in Q3, reflecting a 3.3% decrease compared to the previous quarter and a 13.4% decrease compared to the same period last year.
Over the 12 months (October 2023–September 2024), about 54,110 apartments were completed, a 6.1% decrease compared to the preceding 12 months.
The Central District had the highest percentage of completed units (25.2% or 13,630 apartments), compared to just 9.6% in the Jerusalem District.
The average construction time for buildings over the past year was 28.3 months, while the weighted average based on the number of units was 33.7 months. Due to labor shortages, construction durations are expected to increase by 6–8 months on average.
Amit Gottlieb, Chairman of the Contractors and Builders Association for Tel Aviv and the Central District noted the Central Bureau of Statistics data as a dire warning: “In discussions with the Ministry of Finance, we presented the state of the market, but they completely ignored us. The current budget lacks growth drivers for the real estate industry—only more taxes and burdensome regulations. The 10% drop in housing starts doesn’t even account for the severe shortage of apartments in northern Israel, where entire communities were wiped out and existing stock diminished significantly. Instead of opening the gates to skilled foreign workers as an alternative to Palestinian workers, the state imposes bureaucratic obstacles, leaving contractors and developers struggling across government offices without real solutions.”
Gottlieb also referred to the data on completed construction, stating: “With a 13% drop in Q3, the situation is even more concerning, and these are just the initial signs of an ongoing trend. Prolonged construction times lead to increased costs and reduced profitability, thus a slowdown in housing starts and the issuance of new permits. The implications for the public are dire: within a few years, dramatic price increases are expected, distancing many from the dream of owning a home—all under the state’s oversight, which chooses to ignore the existing crisis. This is a catastrophe for generations to come.”
