1. this is what the social protestors dont understand
They blame the government for the price that housing is so expensive when it not government responsible for property prices its the private sector.
If the private sector drags property prices up to ridiculous levels then they will be to expensive for alot of people and investors who have paid an over the top price to buy the place will make their money back through very high rents.
Even when the property bubble eventually does burst Tel Aviv will always be out of the reach of most people because its Israel's version of London or New York where property prices are never low.
2. to number 1
What you are saying is true in a true free market however in Israel the supply is being artificially slowed since he government is not allowing things to be built and when they do allow it the numbers are too small to make a difference. In addition when land is opened up for building it is difficult for the average Joe to get land usually it is bought up by developers because they sell off large lots. If all the land that could be built on was opened up for building the prices would fall drastically. also interest rates now are at all time lows because of the overall global economy there by making mortgage payments for large loans as low as for the smaller loans that needed o be taken out in the past.
3. This is what #1 doesn't understand
While the government can't 100% control hosing prices, there are some things that they could be doing to improve the situation:
1. Make it law that for every luxury apartment that is built, contractors must also build an affordable aprtment (this legislation exists in some countries).
2. The govt can build new apartments and earmark them specifically for public housing for young couples (this has been started here, to some extent).
3. Limit the phenomenon of people abroad buying up all the housing, for example, in Jerusalem, and thus hiking up the prices. This can be done by imposing more taxes on foreign buyers.