The Marker, Gili Melnitsky, 27.11.2020
Prime Minister Benjamin Netanyahu announced yesterday (Wednesday) that he had ordered the defense establishment to "immediately examine" the closure of crossings into the Palestinian Authority, due to what he defined as a "dramatic jump in morbidity in the PA." An analysis of data from the Central Bureau of Statistics, which examined the effect of the decline in the supply of Palestinian workers in the previous closure, found a decline of more than 20% in construction starts in the second quarter of the year - then the first closure occurred.
Accordingly, a dramatic decline in construction starts is expected in the coming quarter, if it is decided to close the crossings for an extended period. This emerges from data on which the decision-makers in the National Security Council and in government ministries are based.
The impact on the housing market can be difficult, especially in a year when construction starts and land marketing are faltering - which will affect the housing market not only in the immediate term, but in two and three years from now.
Today, about 60,000 Palestinian workers enter Israeli territory every day, and they are the majority of the workforce in the construction industry. The latest closure data show that any 10% drop in the number of Palestinian workers causes a 5% drop in construction starts. Therefore, government ministries are currently working to formulate an outline that will not lead to a reduction in the number of Palestinians employed in Israel, despite the fear of an increase in morbidity in the PA.
Data on the number of Palestinian workers employed in the first quarter of the year show that the number of workers employed ranges from 54.5 thousand to 63 thousand and the level of construction starts in the quarter was maintained at about 3,790 starts per month. During the months of closure in the second quarter - April and May - there was a significant decrease in the number of employed Palestinians, to a level ranging from 17.6 thousand to about 26 thousand.
The number of construction starts decreased accordingly, to a quarterly average of 3,148 construction starts per month, and about 9,445 construction starts in the entire quarter. The implication is clear: Another closure that will prevent Palestinian workers from entering will reduce the number of construction starts in the real estate market - despite the construction industry being defined as essential throughout the closure days.
One of the reasons for the decrease in the supply of workers in the previous closure, despite the exception of the construction industry, concerns the restriction faced by the workers who required them to stay in Israel during the entire closure period - long weeks, without entry and exit. This caused many of them to give up entering the country.
The Ministries of Finance and Construction and Housing are now trying to prevent the expected decline in construction starts and further damage to the housing market, and seek to promote in front of the National Security Council and the Cabinet additional solutions that will allow entry and exit for one or two weeks, subject to Corona inspections.
Professional sources estimate that against the background of the slowdown in land marketing in RMI tenders - due to disagreements between the Ministry of Finance and the Ministry of Construction and Housing on a reduced price marketing method - it is not advisable to cause further slowdown in construction starts, as long-term combination of factors There is also concern about disturbances and increased tensions in the West Bank and the PA, against the background of the closure of the crossings.
Morbidity in Corona in the West Bank has risen sharply in recent weeks, and the Palestinian government announced this week a general closure from next Friday to Sunday. Thereafter, a night closure will be imposed for two weeks. Despite the continuous increase, the PA has so far tried to avoid imposing a general closure and contented itself with spot-on actions of closing areas or institutions, and enforcing the provisions for wearing masks and maintaining social distance.
"Hundreds of thousands of residents will not have a home to live in"
Meanwhile, the Builders of the Land Contractors Association today (Thursday) sent a letter of warning to Prime Minister Netanyahu, Finance Minister Israel Katz, Minister Yaakov Litzman and Bank of Israel Governor Amir Yaron, stating that "the acute management crisis in the government is giving its signals in the construction industry "A housing crisis is developing that will lead to a situation in which hundreds of thousands of residents will not have a home to live in."
The contractors point to a number of shortcomings, in addition to the shortage of Palestinian workers and foreign workers in the industry. Among the shortcomings: a decline in the marketing of residential land by RMI; and the halting of many projects in the field of urban renewal in local authorities, following the position of mayors who are blocking projects in the absence of government assistance.
The association's president, Raul Srugo, and CEO Amnon Merhav added: "We have proposed a set of solutions, but there is no one to talk to. There is no factor that takes responsibility for dealing with the chaotic situation in the industry, and there is no sign of a change of direction. The shortage of apartments will lead to a dramatic increase in prices, and apartments that will only be available to the rich. "