Here in Australia, it has become an investment vehicle; a huge amount of housing stock is empty while a third of the population are living in very poor accommodation.
That's usually the case in Western Europe. Or other artificial limitations put on construction projects.
As a result, the phenomenon of hoarding real estate for profit simply doesn’t exist. And the regular tear down of old houses allows density to increase rapidly, at the expense of building waste.
Land prices in Japan was insane in early 1990s, and then it burst, losing almost 60% of the value. it doesn't get that high without people believing it will appreciate - and now they don't.
Rent collected for buildings/management/amenities goes to landlord, rent collected for the physical land upon which the building exists (which is valuable not because of the landlord) is recouped by the community as tax.
EDIT: to be clear, I meant the "passing on to renters" part, not the "property may become more expensive" part.
This is why the USA provides for a foreign housing deduction, or Americans could never practically live in Singapore without running into double taxation.
We're long past the point where the private sector can estimate housing demand on a long enough time scale for single and multi-family housing in most environments.
Outside of cases like Manhattan or London, where demand is driven more by wanting to 'live in...' than actual economic necessity, I don't see why housing needs to be overly regulated when it only takes one-two years (or less) to build new capacity once you remove all of the unnecessary red tape.
However the view that policy is the only issue to housing just isn't appropriate in many places outside of SF and Singapore is actually a very good example (as is London to a certain degree, expanding inland burroughs notwithstanding): you only have so much space on which to build housing, but the population is variable. If we take the available housing space to be the supply and the population requiring housing to be the demand, you have a textbook case of economic inelasticity.
In Singapore they have ironically solved this with policy, as opposed to exacerbating it, and since this was planned early in the country's developmental phase as an economic policy I can assume they understood this problem as economic one very early on.
Most developed countries don't even have anything close to a Free Market anyway, with restrictions on the construction of new housing, zoning, and rent controls in many places.
A fair amount of that was fueled by long-term tenants getting kicked out by their new landlords who "needed" to reside in the flats. Similar gentrification model to parts of San Francisco.
So yeah, some things in Berlin are very tenant-friendly, but finding what used to be a typical flat in, say, Mitte on what is still a typical salary is pretty much impossible.
Edit: I get the impression that a lot of new housing is being built in Berlin, but I have yet to see any downward pressure on rents or for that matter purchase prices coming from it. The more they build, the more things cost.
The death spiral is accelerated by two factors, firstly private landlords have had their income curtailed and are selling up, secondly prospective private investors in rental housing, wary of further unilateral retrospective changes in the future, are walking away. For those that don't know what the Mietendeckel is, rents in Berlin have been reset to circa 2013 levels, where buildings built before 2014 cannot be rented above 6-10 euros per sqm, existing contracts and renovation investments be damned. For example a building in Friedrichshain built in 1890 but completely renovated < 10 years ago can only fetch 6-8 Euros per sqm, if an elevator is present, underfloor heating and a high quality finish to living areas is provided you could at a maximum charge an extra 1 Euro per sqm. Failure to retroactively lower the rent for your existing tenants is punishable with fines up-to 250,000 Euros, there are practically no loopholes.
So this legislation has lead to the current situation where landlords are preferring to sell their properties when they become empty or when that's not foreseeable, selling them with the tenants in them (which can reduce the final sale price by up to ~30%) or just hold off on renting empty properties for now or even rent them on the booming black market. This is evident in the 47% drop in rental listings for apartments in old buildings and the moderate rise in condominium sales.
German tenancy laws read like the wish list of rental activists in America or the UK, they provide comprehensive protection from no fault terminations and are backed by a lethargic court system, the sole reason that can be given for terminating a contract is when the apartment is needed for you or your relatives own use, a lot of people like to imagine that this is abused but the consequences are so severe I can't see any logical person making that choice. A long term tenant who fights this kind of termination can expect to stay in their apartment for up-to 2-3 years, but in the end will face certain eviction and ruinous costs in excess of 15-40,000 euros. Whilst there are clauses to protect vulnerable tenants from eviction, they are not evident in practice, just recently a 82 year old woman with advanced dementia was evicted as the court determined after 3 years that she could be physically lifted out the apartment by her daughters and so is therefore capable of moving elsewhere.
There is nothing to rent here, your sole choice is to buy a place, but you won't be able to afford an apartment which is unoccupied as the banks' valuations don't match that of the realtors. Which leaves you with finding soft targets for eviction, the easy to persuade will have accepted an offer, so take a pick between the elderly or single earner families with kids.
According to the first internet resource[0][1] I found (as well as anecdotal data from many people I know in both cities) wages are more or less the same in both (tech workers earn more in Tel Aviv but everyone else earns more in Berlin).
I would say while the situation needs improvement (namely more housing built & faster) it's hardly the worse I've seen & almost everyone I know in other major global cities suffers from a worse housing market.
House prices in Australia are driven by two forces - immigration and monetary policy (ie, interest rates).
Neither of those drivers are linked to a free market. The equilibrium in both is set by government decree (immigration numbers) and interest rates are set by the RBA (effectively part of the government bureaucracy) to a first approximation.
The government doesn't have an explicit policy of pushing up house prices, but there is a very strong implicit policy to the same effect. Giving them more direct control over housing wouldn't change much.
Which is a pity, really. IMO housing policy should target property prices to follow inflation.
Housing isn't a free market if the government's central bank puts its thumb on the scale by printing money for mortgage loans. The Fed does that in the US.