Alex Tabarrok writes:
Why has housing become so expensive in high-productivity places? It is true that there are geographic constraints (Manhattan isn’t getting any bigger) but zoning and other land-use restrictions including historical and environmental “protection” are reducing the amount of land available for housing and how much building can be done on a given piece of land. As a result, in places with lots of restrictions on land use, increased demand for housing shows up mostly in house prices rather than in house quantities.
The prices in Israel are prohibitive, especially in Tel Aviv. The apparent reason is that Israelis are earning good wages and saving and investing. Old-timers that invested in real estate are rich and harvesting the rent produced by the success of the country.
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