Israel's Housing Market Paradox: Record Building Permits, Fewer Completed 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 from 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 receiving a completion certificate, which allows for occupancy, dropped by 10% to about 42,700 units.

This widening gap between permits and completed units illustrates a bottleneck in the market. Developers are reportedly delaying the release of completed apartments, contributing to the stagnation of housing prices. The completion certificates are based on permits issued several years prior, explaining the inherent lag, but the substantial disparity suggests a systemic issue.

The decline in completed units is attributed to a persistent labor shortage in the construction sector, hindering contractors from meeting deadlines and leading to the collapse of numerous building firms. Concurrently, a slowdown in apartment sales, characterized by a sharp drop in transaction volumes and a growing inventory of unsold homes, is prompting many contractors to voluntarily slow down project completions, even if they have sufficient labor.

The discrepancy is evident at the city level. Jerusalem, for instance, issued permits for 8,444 units but only saw 1,945 receive completion certificates, a ratio of less than 1 to 4. Tel Aviv, conversely, led in completions with 5,684 units, 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, causing delays in the planning process.