Israel's Housing Market Sees Record Building Permits Amidst Declining Completions

Israel's Planning Administration reported a record high of approximately 84,400 new housing unit permits issued in 2025, an 11.5% increase from the previous year. This surge in permits is intended to signal more construction starts and ultimately lead to a greater supply of completed homes, which theoretically should lower housing prices. However, the data reveals a contrasting trend, with a significant drop in the number of completed housing units receiving occupancy certificates.

In 2025, only about 42,700 housing units were completed, a nearly 10% decrease from the 47,400 completed in 2024. This shortfall means Israel is unlikely to meet its strategic housing target of 65,000 completed units annually. While Jerusalem and Tel Aviv led in permit issuance, with Jerusalem issuing over 8,400 permits, the number of completed units in these cities also saw a decline.

The report also highlighted improvements in the functioning of local planning committees, with 68% meeting the minimum legal requirement for sessions, an increase from the previous year. Additionally, 93% of committees held at least one licensing authority meeting per month. Despite these procedural gains, 32% of committees still failed to meet the minimum session frequency, and only 45% of committees disseminated committee decisions within the legally mandated three days.

Furthermore, the attendance rates of advisory representatives in committee meetings remain low. The report indicates a decrease in the participation of the Interior Minister's representatives, attending only 14% of meetings in 2025 compared to 20% in 2024. This situation presents a paradox of increased building permissions without a corresponding rise in actual housing availability, potentially exacerbating market pressures.