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So I lived for years in a private property in the center of Tel Aviv. 2 min walking distance from Disengof center. While there are a few high rises in the area

So I lived for years in a private property in the center of Tel Aviv. 2 min walking distance from Disengof center. While there are a few high rises in the area there's still a lot of low rises and old buildings. There are still single story houses right in the center. (Edit: my point here is that there's a lot of space and people don't build enough). The problems are multiple. You are correct, I over simplified and interest is a huge reason for this bubble. 1. The local government doesn't allow construction in the areas people want. They're afraid that the influx of people will reduce the quality of life since the school system, sewage, policing etc. needs to be updated. They also lose on residence financially. Businesses fund cities and municipalities go bankrupt if they allow too much construction. 2. Traffic to Tel Aviv is terrible which makes even the outskirts less attractive. There's no parking either and if you choose to use public transport then it's closed in the weekends. I hope the light rail will change this but I think it's too little, too late. I'd keep a close eye on the prices in Bat Yam and Jaffa. If they go up there it might be due to the rail. 3. The government is the biggest landowner in these parts, it sells lands using a process that values return rather than the price to the consumer. 4. The rent market isn't regulated at all. That means investors push up prices and then overcharge on rent. Rental properties have a lower tax bracket than stock market investments. My accountant has 10 apartments for rent and this isn't an exceptional scenario. People are hoarding properties.

YZF 3y ago
Rental properties and landlords is part of how the market works. That can be a good thing. In Vancouver (so they say) people own condos and don't rent them out, they just sit empty. In North America people lose it when you talk about government interfering with market prices but Vancouver (or rather British Columbia) has limits on how much you can raise rent for existing tenants every year, but there's plenty of loopholes. All in all the rental returns are not great. A $2M house might rent for (guessing) $5-7K a month, that's a bit more than 3% return, before expenses. Prices have been crazy for the last two decades. They're not showing any signs of a major reversal. I remember talking with some real estate guy about how expensive Vancouver is- 15 years ago. There is so much more demand now despite prices being x3-5.

YZF 3y ago

Rental properties and landlords is part of how the market works. That can be a good thing. In Vancouver (so they say) people own condos and don't rent them out, they just sit empty. In North America people lose it when you talk about government interfering with market prices but Vancouver (or rather British Columbia) has limits on how much you can raise rent for existing tenants every year, but there's plenty of loopholes. All in all the rental returns are not great. A $2M house might rent for (guessing) $5-7K a month, that's a bit more than 3% return, before expenses. Prices have been crazy for the last two decades. They're not showing any signs of a major reversal. I remember talking with some real estate guy about how expensive Vancouver is- 15 years ago. There is so much more demand now despite prices being x3-5.