Well, at the very least, will be an interesting economic experiment.
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Berlin approves 5-year rent freeze
21–30 of 594 posts
Re: Berlin approves 5-year rent freeze
#22As much as I can sympathise with the predicament, this decision, and the Berlin housing market in general, absolutely baffles me.
When I moved here I was warned of 100 people turning up to a flat viewing, and laughed it off as some hyperbole. Only later did I find out that it actually happens, albeit the maximum viewing I went to was around a meagre 50. Having come from the UK, I found the situation in Berlin to be absolutely ridiculous. There are already strict rental price limitations in place (based on location, size of the property etc.), and although these can be skirted, in general they're clearly very effective.
Again, I sympathise with city housing being very expensive, and don't believe that purely gentrified city centres are likely to be a good thing. Still, economics 101 seems to suggest that merely putting rental freezes in doesn't fix the problem. It just (as is already the case in Berlin), leads to excess demand. The solution is to build houses, but what kind of investor is going to throw their money at Berlin, where their opportunity to make a return on their investment is severely hampered? I just don't understand this stance at all.
Re: Berlin approves 5-year rent freeze
#23Symptom: rents are too high Cause: insufficient housing supply Solution: disincentivize new construction?
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Re: Berlin approves 5-year rent freeze
#24At the same time german tax office will give you trouble if you don't make enough profit as a landlord.
Re: Berlin approves 5-year rent freeze
#25Earlier quoted context omitted.
Raising prices = Demand > Supply. You can either try to curb the demand (by e.g. creating incentives for companies to build offices elsewhere, move government bureaucracy somewhere else, etc.) or improve the supply by facilitating new construction, which in most places on earth is limited by, again, local government restrictions. edits: grammar
What's wrong with legally limiting artificial price hikes to prevent people from abusing Demand > Supply for the sake of their greed? [Edit] To clarify, they seem to be "artificial" price hikes because they don't in any way necessary to cover costs. People realize they can charge more and get more money, so they simply do. That's inherently avaricious and unethical. Sure, maybe prices work themselves out, so that pri…
What's "artificial" about the price increases?
Re: Berlin approves 5-year rent freeze
#26Symptom: rents are too high Cause: insufficient housing supply Solution: disincentivize new construction?
This would only be true if rent wasn't already (relatively) way above the cost of new construction and if the freeze applied to new buildings too.
Land values rise to make the margins developers work within very small. Land is a problem everywhere and someone owns it and will always try to extract the best price if you have planning permission for it.
So maybe capping land prices and forcing sales for desirable schemes would work better. It will of course never happen as ownership is fundamental to our thinking in the west. I actually find the idea of the government forcing me to sell land I own at below market value quite offensive. I understand that is irrational.
Maybe this problem is quite complicated?
Re: Berlin approves 5-year rent freeze
#27Good luck finding a flat if you are moving to Berlin ...
Re: Berlin approves 5-year rent freeze
#28Earlier quoted context omitted.
Raising prices = Demand > Supply. You can either try to curb the demand (by e.g. creating incentives for companies to build offices elsewhere, move government bureaucracy somewhere else, etc.) or improve the supply by facilitating new construction, which in most places on earth is limited by, again, local government restrictions. edits: grammar
What's wrong with legally limiting artificial price hikes to prevent people from abusing Demand > Supply for the sake of their greed? [Edit] To clarify, they seem to be "artificial" price hikes because they don't in any way necessary to cover costs. People realize they can charge more and get more money, so they simply do. That's inherently avaricious and unethical. Sure, maybe prices work themselves out, so that pri…
So basically creating an artificial demand stop is the solution to creating the "artificial" price increase?
Re: Berlin approves 5-year rent freeze
#29Earlier quoted context omitted.
Raising prices = Demand > Supply. You can either try to curb the demand (by e.g. creating incentives for companies to build offices elsewhere, move government bureaucracy somewhere else, etc.) or improve the supply by facilitating new construction, which in most places on earth is limited by, again, local government restrictions. edits: grammar
What's wrong with legally limiting artificial price hikes to prevent people from abusing Demand > Supply for the sake of their greed? [Edit] To clarify, they seem to be "artificial" price hikes because they don't in any way necessary to cover costs. People realize they can charge more and get more money, so they simply do. That's inherently avaricious and unethical. Sure, maybe prices work themselves out, so that pri…
Are you asking in the short term or the long term?
Re: Berlin approves 5-year rent freeze
#30As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.
Genuinely curious: what do you think would be a better response?
Build more housing, ensure that it can't be bought by speculators, incentivize renters to buy the property they are in.