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With his surprise interest-rate hike, Stanley Fischer sent a sharp message to Jerusalem yesterday, for the third time: There it is, right under your noses, a real-estate bubble is developing, and you aren't doing a thing about it.

For months Fischer, the governor of the Bank of Israel, has been trying to cool demand in the housing market, to stop home prices from climbing further.

It hasn't worked. His three previous interest rate hikes didn't do the trick. Nor did his indirect move to force mortgage banks to charge higher interest on loans worth more than 60% of a home's value (by ordering them to set aside a higher proportion of the loans in case they went sour).

Fischer has tools at his disposal: interest rate hikes and restrictions on bank activities. But he knows perfectly well, as do Israel's builders, that the only real solution is to increase the supply of land for development.

The state has dealt out land for housing with a tight fist and suspended development plans for the center. It created a shortage, and once financing terms turned attractive - as interest rates dropped to all-time lows - demand shot past supply. The result was that home prices have shot up 30% in two years.

Even in the last quarter, housing prices continued to increase, though many buyers are waiting on the fence, hoping they might land a better deal soon.

The Bank of Israel's job isn't to set trends in the real estate market. Mainly, its mandate is to keep the banks stable, and it's worried that housing prices will bloat to the point of endangering banks. But the central bank under Fischer has clearly been trying, for a year now, to cool demand in the property scene - while the government and its housing minister, Ariel Atias, settle for hollow promises of land reform.