If the situation improves, the market should pick up slightly from its decline over the past few years. Palestinian workers constitute about one-third of the construction sector's employees. Katz said that even though the government has approved the entrance of an additional 9,000 foreign, non-Palestinian, workers, there will still be a labor shortage. Demand will also be affected by the political situation, as increased uncertainty about the future may deter or delay potential housing purchases. According to Katz, the housing sector is divided into two markets - sales and rentals.
Sales are more likely than rentals to experience a slight downturn.
Prices in the rental sector, which comprise the data used for housing prices in the government's calculations of the consumer price index, are more sensitive to the foreign-exchange rate than to the current unrest. Before the disturbances began in late September, Katz said that the market was showing signs of improvement. There were expectations that the growth in activity would be higher in 2001. Since then, the outlook is less optimistic and it would be fair to say that we'll go back to the level of residential starts that we saw in 1999 - around 38,000, as compared to the 42,000 to 43,000 we saw earlier this year. The unit is in need of renovations, includes access to parking, and is located on the building's first floor.