Contractors' gloomy outlook regarding the long-term impact of the zero-rate VAT program on the market. An economic review by the Israel Builders Association (formerly the Contractors Association) for July 2014 indicates a continued downward trend in construction starts and predicts that 2014 will end with a significant decline in construction starts compared to recent years.<\/p>\r\n
As part of the review, the association's economists also address apartment prices and predict that the low supply, the slowdown in sales, and the subdued demand will lead to a continued rise in prices in 2014.<\/p>\r\n
\""The stagnation in the housing sector is expected to cause a decrease of approximately 12% in the volume of construction starts this year," according to the review. The association's economists note that in the past 18 months, a general downward trend in construction starts can be identified, against the backdrop of uncertainty in the housing sector: "The downward trend of the past year in construction starts continues, with this figure standing at 10.3 thousand housing units in the first quarter, a decrease of 6% compared to the previous quarter and a decrease of approximately 16% compared to the corresponding quarter last year.<\/p>\r\n
\""The forecast for the second quarter of 2014 is for construction starts of 9,000 apartments, and the annual forecast for 2014 is for construction starts of only about 40,000 apartments. The uncertainty created in the economy by the postponement of the enactment of the 'Zero VAT' law, and the implementation of the 'Target Price' program, is likely to further reduce construction starts in the third quarter of the year.".<\/p>\r\nThe data is based on processing data from the Central Bureau of Statistics, combined with data on the number of building permits issued to contractors in the first quarter of 2014 and public-initiated construction starts in the second quarter of the year.\r\n
At the same time, the contractors warn that, along with the slowdown in construction starts, the still high demand is already leading and will continue to lead to an increase in apartment prices. "If the stagnation in the housing market continues and apartment prices continue to rise, at a rate similar to that recorded since the government announced the 'zero VAT' and 'target price' programs, apartment prices will rise by approximately 8.61% this year," the contractors estimate, explaining: "Along with the decline in the number of transactions, the Central Bureau of Statistics' apartment price index continued to rise in April and May 2014.".<\/p>\r\n
According to the survey, the number of months to complete the construction of an apartment increased by 51 months in the first quarter of 2014 compared to the previous quarter. In the past year, this is an increase of 91 months in the average construction time of an apartment. The association's economists explain that this figure reflects, among other things, the shortage of professional workers, both foreign and Palestinian, whose number has decreased in the past two months due to the security situation.<\/p>\r\n
The number of apartments in the Israel Land Authority's auctions also decreased in the second quarter of this year by 4.51% compared to the first quarter of 2014 and by about 101% compared to the corresponding quarter last year. Thus, in the first half of the year, the volume of land for housing marketing amounted to only about 21 thousand apartments.<\/p>\r\n
It is important to note that while the contractors' forecast regarding construction starts is based on more measurable data, the forecast regarding price increases is less accurate and should be treated as such, especially because the data nevertheless comes from the contractors who are trying during this period to re-energize apartment sales during the stagnation period.<\/p>\r\n
In reference to the contractors' gloomy outlook, Uri Shani, advisor to the Housing Cabinet and chairman of the Housing Cabinet, said today: "We are holding a dialogue with the contractors. Our goal is that young people from the construction class who served in the army will be able to purchase an apartment. The zero VAT law will be passed as soon as possible." It should be noted that the Ministry of Finance has not given up on the aforementioned law, and officials in the Ministry of Finance are convinced that apartment prices will fall in 2015 and supply will increase.<\/p>","protected":false},"excerpt":{"rendered":"Gloomy forecast by the Israel Builders Association following the slowdown in the housing market and the fighting in the south: "Construction starts will fall by 121% this year" \u2022 "If the stagnation in the market continues and the rate of price increases continues - this will lead to another increase in apartment prices"\"","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[2510,6604,32324],"class_list":["post-62844","post","type-post","status-publish","format-standard","hentry","category-4","tag-2510","tag-6604","tag-32324"],"acf":[],"yoast_head":"\n