Residential construction in first half 2016

September 18, 2016

Bottom line:  The number of housing starts in January-June 2016 was down — but only compared to the levels of 2015. In absolute terms, 24,000+ apartments is a good rate. As for the overall supply pipeline, the total number of apartments under construction is making new highs every quarter.

Specifics:

• The number of apartments on which construction began in the first half of 2016 was lower (by 6.9%) than that in the first half of 2015, and lower by 2.1% than the number on which work began in the second half of 2015.
• However, that reflects the fact that 2015 saw the highest number of starts (at over 50,000) of any year since 1997 — when the construction boom of the 1990s ended. In absolute terms, the 24,000+ starts in January-June 2016 was the highest number of any year this century — other than 2015.
• More surprising is the slowdown in completions — less than 20,000 in the first half of the year. This suggests contractors are dragging their feet on completing their projects and the average time for building an apartment is getting EVEN longer.
• Because of the growing gap between the number of starts and the number of completions, the number of apartments under construction rose sharply in both the first and second quarters of 2016, to over 106,000 at end-June.
• On a regional basis, housing starts rose most strongly in the Jerusalem district (by 18.2% compared to January-June 2015) — but not in Jerusalem itself, rather in Beit Shemesh. The Tel Aviv district also saw a rise, of 11.0% — and Judea and Samaria posted a strong gain, of 16.7%, although this district only accounts for 5% of total starts.
• A lower number of starts were recorded in the Haifa district (down almost 35%!), the Northern district (-15.7%) and the Southern district (-11.0%), while the Central district was almost flat (-0.4%).