Why does the national government allow the city of Berlin to implement such short sighted and destructive policies? There should be some guidelines set by the national government about what you can and can't do in terms of housing supply.
Berlin approves 5-year rent freeze
51–60 of 594 posts
Re: Berlin approves 5-year rent freeze
#52As 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.
The same thing will happen there as has happened in California. Landlords exit the market, developers stop building new housing, and ten years later you have a housing crisis twice as bad as the current one.
Re: Berlin approves 5-year rent freeze
#53As 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.
As a person living in New York who thinks rent stabilization has been largely more successful than not at achieving its goals, I disagree.
The data disagrees with you, it has caused shortages. Especially pre-90s.
Since I was downvoted for stating things that are factually observed:
https://web.stanford.edu/~diamondr/DMQ.pdf
https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re...
https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...
https://www.economist.com/the-economist-explains/2015/08/30/...
http://iea.org.uk/sites/default/files/publications/files/Ver...
Re: Berlin approves 5-year rent freeze
#54As 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.
In the west we don’t order prises to stop rising. We just invade a country when oil prises become too high.
Re: Berlin approves 5-year rent freeze
#55Symptom: rents are too high Cause: insufficient housing supply Solution: disincentivize new construction?
There can be many causes to this problem, not just an apparent lack of supply. You could just as well say 'too much demand' is 'the problem'.
Aside from regular market issues, there could be a number of external factors (i.e. non-berliner ownership) that might be exacerbating the problem.
Re: Berlin approves 5-year rent freeze
#56As 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.
As a person living in New York who thinks rent stabilization has been largely more successful than not at achieving its goals, I disagree.
People who disagree with rent control largely disagree with the goals, which is to keep existing residents where they are.
It’s effective at that until landlords abuse the loopholes, which you have to keep closing through legislative whack-a-mole.
Re: Berlin approves 5-year rent freeze
#57Seems like only going to create a black market, or funnel the rent in other ways.
Re: Berlin approves 5-year rent freeze
#58As 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?
I think there could be a better way to regulate how rents are determined, for example:
One symptom is that current tenants are subject to arbitrarily high rent increases, masquaraded as "market rate"
But when they finally evict, the landlord has to actually change the rent to something different until someone bites. Often times it is much lower or has some other concession.
If there were some way to regulate this behavior without easy ways to get around it, it could alleviate some pressure.
Re: Berlin approves 5-year rent freeze
#59Earlier quoted context omitted.
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 gover…
The problem isn't developers at all - they make only a small margin.
The people who are abusing the system are equity investors who demand a return on their investment within as little as 2-3 years, leading to unrealistically high rents. All rent control is doing in this case is forcing investors to take a longer period of return.
Re: Berlin approves 5-year rent freeze
#60I think the only solution to high rents and home prices is to build more and more supply. But strangely there is opposition to this from both sides of the political spectrum. Left opposes it in the name of “preserving neighborhoods”, conservative wealthy home owners dont want new inventory to reduce their real estate valuations, and developers oppose it because it will eat into their profits.