Severe shortage of apartments in areas where most Israelis want to live will lead to prices rise

Over-planning, excess supply in the periphery and a severe shortage of apartments in areas where most Israelis want to live - these are the main problems arising from a follow-up report published by the National Economic Council in the Prime Minister's Office for the 2040-2017 strategic housing plan.
According to the report, edited by Nir Brill, Daniel Schwartz, Avraham Zofnik, the most acute shortage among Jewish localities in Israel is in the heart of the demand areas - in the Tel Aviv and Central districts, where more than 70,000 housing units are missing. Last week by the Central Bureau of Statistics (CBS), the severe disparities in these districts between the number of dwellings and demand are already being reflected in soaring dwelling prices. For example, in the Central District - which has led the price increases recorded since the beginning of the year - prices have jumped by about 7.5% in recent months.
According to the survey, a cumulative shortage of apartments is also present in Jerusalem, Judea and Samaria and the Ashkelon sub-district. In Judea and Samaria, the gap between the apartments under construction is expected to be completed by the end of 2022, compared with 34% for housing needs there. Compared to these districts, in the periphery the ratio of construction to housing needs is significantly lower, and in some of those districts there is no flooding. For example, the Hadera sub-district (which includes Harish), the Northern District and the Be'er Sheva sub-district have a supply surplus of 5,000, 4,000 and 3,000 housing units, respectively.
The plan, which was approved in February 2017 and has since been used as a compass for the planning institutions and the construction industry, is intended to adapt the planning and construction goals to the growing housing needs of the population in Israel. However, due to the failures revealed by the editors of the report, which reached TheMarker, it is proposed for the first time to update the strategic plan and its editors indicate new housing targets for each district for the next decade.
The strategic housing plan has set a target for the construction of 1.5 million apartments by 2040. However, this without clear construction goals - and not just planning - is clear for any geographical area. The report's editors concluded that because of this failure, the state markets and plans where it is convenient and available to it - without properly considering the population's demand. The report's editors add that each year the demand increases by 5,000-4,000 housing units.
The editors note in the report the state's failure to stimulate demand in peripheral areas, and the consequences of planning and construction in isolation from the demand for apartments: "The structure of preferences of Israeli residents is quite rigid, and even if there is a shortage of housing units in a certain area." Significantly for a different geographical area. "
According to them, "the lack of a regulated response to the demand for housing in the central region and in Jerusalem creates considerable difficulties and congestion on existing infrastructure, and probably leads to the expansion of partial and unregulated solutions, such as apartment splitting, illegal construction or young people's homes."
According to the report, the deepest gaps between construction and the needs of the population exist in the localities of non-Jewish society. Thus, there is a severe shortage of about 99,000 housing units in localities where minorities live - including in the Jerusalem District In the Southern District (26,000 housing units), in the Northern District (19,000 housing units) and in the Haifa District (16,000 dwellings).
"The findings show a bleak picture. The results indicate a large shortage of construction in relation to housing needs, which has worsened over the years in all areas in which Jewish society is not concentrated," the report said. "Through illegal construction, which naturally has a very poor quality of planning and construction, which indirectly affects many areas other than the housing market."
The authors of the report emphasize the importance of dealing with the acute housing crisis among the non-Jewish population in Israel, which will be required to respond to the new government.
Compared to estimates of the performance of residential construction, the report points to a completely different picture in the planning arena - where significant supply surpluses have been recorded since the establishment of the strategic plan. " , Determined in the strategic housing plan, mainly in the Jewish localities. However, a significant part of the increase in planning in the Jewish sector focused in 2020-2016 in the northern, southern and Haifa districts - where there is no great shortage of construction finishes in relation to the demand for housing units, "it was written. Beyond the destination), the Southern District (95% beyond the destination), the Ashkelon sub-district (58% beyond the destination) and the Haifa district (47% beyond the destination).
In the field of urban renewal, the report indicates growth in the number of housing units promoted by these routes - along with failure in renewal also in the periphery. Thus, about half of the housing units built in urban renewal in Israel are in Tel Aviv District, where 60% of all construction starts rely on these projects. However, in the northern and Judean and Samaria districts, urban renewal procedures are hardly promoted, and in the Jerusalem and southern districts, construction starts are particularly low, and in the Central and Haifa districts there are a large number of urban renewal starts, but some of the total construction starts remain limited.