Israel's Housing Market Paradox: Record Building Permits, Shrinking New Homes

Israel's housing market is facing a paradox, with a record number of building permits issued in 2025, yet a significant decrease in the number of newly completed apartments available for occupancy. Data released by the Planning Administration reveals that permits were granted for approximately 84,400 new housing units, an 11.5% increase from the previous year, marking a new high. However, the number of apartments that received a completion certificate, signifying readiness for occupancy, dropped by 10% to about 42,700 units.

This substantial gap between permits and completed units highlights a bottleneck in the market. A building permit is merely the initial stage; only apartments with a completion certificate are officially added to the market. The lag between permit issuance and completion, which can take years, is expected, but the current wide disparity suggests a systemic issue. This situation is reportedly encouraging developers to hold back on releasing units, potentially hindering any expected price reductions.

The decline in completed apartments is attributed to a persistent labor shortage in the construction sector, which has led many contractors to fall behind schedule and contributed to the collapse of hundreds of execution companies. Simultaneously, a slowdown in apartment sales, characterized by a sharp decrease in transaction volumes and a growing unsold inventory, is prompting many contractors to voluntarily slow down project completion, even if they have sufficient labor.

The disparity is evident at the city level. Jerusalem led in building permits with 8,444 units but ranked fifth in completion certificates with 1,945. Tel Aviv, conversely, led in completion certificates with 5,684, closely matching its 6,915 permits. In Netanya, the situation was reversed, with more completion certificates (2,497) issued than permits (2,030).

Furthermore, some local planning committees are struggling to meet basic legal requirements. A third of these committees did not hold the minimum number of required meetings last year, and only 45% published their decisions within the mandated three days, leading to delays in the planning process.