A historic record in the number of apartments construction began: 72,540 last 12 months

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by Ifi Reporter Category:Real Estate Sep 20, 2022

A historic record in the number of apartments whose construction began - 72,540 in the 12 months between July 2021 and June this year, 24% higher than the previous 12 months (July 2020-June 2021) in which the construction of approximately 58 thousand apartments began.
The number of apartments whose construction began in the period under review is the same as the record recorded in 1995 at a time when hundreds of thousands of immigrants from the Commonwealth of Nations were absorbed into the country. According to the Central Bureau of Statistics, the number of apartments with construction permits issued in the period under review is even higher - 80,670. This figure is 30% higher than the number of apartments in permits issued in the corresponding period a year earlier - 62 thousand apartments. Usually, after a building permit is issued, a few weeks or a few months pass until the contractor actually starts construction.
However, despite the annual increase, it is evident that in the second quarter of 2022 the pace of construction starts has slowed. While in the months of January to March, the construction of almost 20,000 apartments began, in April to June, the construction of 17,712 apartments began - a decrease of 11%. Nevertheless, this quarterly figure is also high compared to the figures in each of the quarters until the last quarter of 2021, at least since 2014
In the coming months we will be able to know if the rate of construction starts reached a momentary peak this year and is on a downward trend or stabilizes at approximately 70-80 thousand apartments per year.
The CBS data shows that almost half of the construction starts and, naturally, the building permits were also issued in the Central and Tel Aviv districts. In these districts, during the period under review, permits were issued for the construction of 38,362 apartments - 47% of the total number of apartments with building permits throughout the country. Accordingly, construction of 46% of the apartments began in these districts. In each of the districts in Israel there was an increase in the number of building permits compared to the previous 12 months (July 2020 to June 2021), with the exception of the Haifa district where there was actually a slight decrease: from 6442 apartments to 5988.
14%, which is about 10,330 of the total number of apartments whose construction began in the 12 months under review, are in target price or tenant price projects, 19% lower than the previous 12 months.
The leading settlements in the number of construction starts in the 12 months under review are Tel Aviv-Yafo (5,432), Jerusalem (4,514), Bat Yam (3,431), Ashkelon (3,338), Rishon Lezion (3,004), Beit Shemesh (2,979) Netanya (2,716) and Ramat Gan (2,007).
The serious problem that this type of data raises is the duration of the construction. On average, the duration of building an apartment reached 32.2 months compared to 25 months a decade ago. The duration of the construction of an apartment in a building is shortened to about 27 months on average. For this reason, the construction completion figures do not catch up with the construction starts. Although construction starts have grown, construction completion figures are faltering. In the 12 months under review, the construction of 49,650 apartments was completed, just like in 2020 and less than in each of the years 2017-2019 in which the construction of 50,000-52,000 apartments was completed. In 1997, two years after that historic record, the construction of 68,447 apartments was completed. 25 years later we are still far from this pace of construction.
The CBS added a short but significant paragraph to the review, which should shake Housing Minister Ze'ev Elkin. According to the CBS' analysis, the characteristic found to have the greatest impact on the duration of construction is construction within the government housing program (target price or price per resident). In recent years, we have published dozens of articles about delays in the construction of projects with a price per resident and an apartment at a discount, and now we have received statistical information that substantiates the claim and requires a thorough examination. Other factors that negatively affect the duration of construction are urban renewal procedures, the number of floors, and the extent of underground construction. But all these factors do not harm the pace of construction and efforts to increase the supply of apartments as the government plan does.

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