The uncertainty in the industry following the delay in the zero-rate VAT program, as well as a slowdown in apartment purchases in recent months, is affecting the volume of new apartment construction starts. In the second quarter of 2014, construction began on 9,311 new apartments, a decrease of approximately 19.31% compared to the previous quarter and a decrease of approximately 13.81% compared to the corresponding quarter last year. This is according to construction start data published today (Sunday) by the Central Bureau of Statistics.
According to the data, the number of apartments whose construction began in the quarter under review is the lowest since the third quarter of 2012, when construction began on only 9,006 new apartments. When broken down by district, a decrease in construction starts compared to the previous quarter was recorded in all regions except the Northern District, where the number remained the same. However, compared to the corresponding quarter last year, a decrease was recorded in construction starts in the Haifa, Tel Aviv, Central, Southern and Judea and Samaria districts, while an increase was recorded in the Jerusalem and Northern districts.
The new apartment sales data published last weekend also continue to indicate the severe slowdown in the industry. According to the data, only 1,452 new apartments were sold nationwide last July, a decrease of approximately 16.61% compared to the previous month and a drop of approximately 391% compared to July 2013. Thus, the impact of the slowdown in apartment sales also directly affects construction starts, as contractors and developers are waiting to launch new projects. It should be noted that the postponement of the Housing and Home Affairs Ministry's tenders for thousands of housing units in the past two months following Operation Protective Edge could further affect construction start data.
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Let us recall that in the first quarter of 2014, there was a decrease in the number of apartments whose construction began by about 6% compared to the previous quarter (last quarter of 2013) and a more significant decrease of about 16% in construction starts compared to the corresponding quarter last year (first quarter of 2013). In the first quarter of 2014, construction began on 10,341 new apartments throughout the country.
