If it ain't broke, the government can fix that.

A lot of hot air has been expended by various government officials about the real estate crisis recently. Every minister has a solution for the problem of out of control prices.  And every one of these solutions has one thing in common, they all show that nobody in the government has ever worked in real estate and construction.  Hearing our esteemed finance minister speak about the government setting up a company to build and market rental properties honestly drives me to drink.  Does anyone actually believe a man that thinks middle class problems are not enough money to vacation abroad more than once every couple of years has any concept of the type of people in the rental market, and what their needs are.  Honestly our government's answer to fixing the problem of rising prices has been to repeatedly raise the minimum needed for a down payment. this shows that nobody in the government or Bank of Israel has no concept of either the middle class or any other market considerations in real estate.

The actual biggest issue in the Israeli housing market is supply.  There is a 30,000-40,000 unit shortage per year. Raising the minimum down payment won't change that, people will still need to live somewhere, all you are doing is making it harder for them to purchase a place where they can stay long term.  That doesn't change the fact thatchers till need to live somewhere.

If the government was serious about solving the housing shortage they would need to make major sweeping changes.

First of all, they would need to spend major money on transportation. Most people in this country are not willing to spend more than an hour commuting to work.  Since most of the jobs are still in the Merkaz, that means that bigger highways and hi-speed rails are of paramount importance if you want people to move out of the Tel-Aviv area and into other places.  A major highway should have more than 2 lanes in either direction.

Second, they need to make EVERY SINGLE PIECE OF LEGALLY BUILDABLE LAND available for purchase, with the caveat that construction must begin within 5 years or the land reverts to the government.  There is no reason why the land should be left locked away. If a developer thinks that on a specific piece of land he should need to wait until the Land Authority decides it wants to offer that piece, if it chooses to at all.  Let the market and private industry set the land price, not the government.  As we say in real estate, ultimately, a property's value is what someone pays for it.  

Ultimately this won't change until we require that ministers must have previous experience before they can be come minister of whatever department they will head up. If our construction and housing minister was never a real estate broker or developer, he will never have a use understanding of what it takes to get a home built and sold. If our finance minister was never an accountant or controller, he will never understand what it takes to budget or finance a development. If our industry and trade minister was never a business CEO or other senior management officer, he will not have an understanding of how to best allow the government to let businesses grow and flourish. Ok I guess we are making some progress on that one.

Basically if the government wants to help people be able to get an affordable home, and keep the market from getting out of control, they need to stop interfering so much, and just let the market take it's natural course, without subsidies or restrictions.

I know some of you will say that what happened to the American market shows that you need regulation, but remember I said remove, interference, not regulation, they are 2 vastly different things.

This is of course just one man's opinion,  it just happens to be a man with more experience in the industry than all of the government officials trying to get headlines with their sound bites and half baked plans combined, that's all.