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Berlin approves 5-year rent freeze

reuters.com

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Re: Berlin approves 5-year rent freeze

#361

Post by bronzeage »

the only scalable solution is to reduce demand, not increase supply. cities are already getting pretty saturated, and building more houses isn't going to solve a thing.

what is really needed is very fast public transportation from outside cities to the cities themselves, and incentives for workplaces to split into sub-branches in other nearby locations instead of endlessly expanding within the same city.

most people would prefer living outside the city for cheaper and higher quality of housing, the force pulling them back towards the city is the transportation distance to work. the force pulling workplaces into the cities is that they want to minimize transportation time for potential employees (unless the workplace has a location tied to the city), while they still need to cluster employees who have to work together.

so everything is clustered, and there's nothing to do about it.

only way that this can end, is if you reduce the force pulling everything together - by reducing transportation distance - while in the same time, you need to introduce some incentives for workplaces to split to sub branches.

Re: Berlin approves 5-year rent freeze

#362

Post by jotm »

EliRivers wrote: post #352
jimmaswell wrote: post #309

Earlier quoted context omitted.

I don't buy any of this. Growing up everyone around me saw the city as somewhere you begrudgingly went out of necessity and only lived there if you had no choice, and I'm inclined to agree. In virtually every aspect I find more countryside-ish living much more pleasant. Consider virtual reality and remote work. I imagine much of the workforce will move to virtual offices in the near to medium-far future when corporat…

Depends on what you want, I suppose. High density humanity simply makes practical and economically viable gatherings, grouping and other activities that just don't work in low-density populations. Classes, meetups, specialist stores, hobbies, clubs, shows, lectures, institutions and just plain bubbling, embryonic interactions; all of it an order of magnitude more intense in a big city. Travel even fifty miles away fr…

15 miles, 2 hours? Hmmm, maybe invest in New roads.

But city living is sad, yeah you can have all the social fun, but none of the quiet, peace, living and hobby space.

I like living 10 miles from the city, lots of space, quiet and green, can drive 20 minutes to the shity anytime.

Re: Berlin approves 5-year rent freeze

#363

Post by ivan_gammel »

2T1Qka0rEiPr wrote: post #22

As 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…

This measure discourages investors to purchase already existing property, for sure. But this also leaves the opportunity to put the money in construction. The market in Berlin is still very attractive due to very high demand, so lets see how quickly can the local councils allocate land for new housing. Some time ago I’ve also heard the complaints that city has no enough capacity to give building permits quickly. Those could be the real bottlenecks in the city which grows by 200 000 every year. It’s also interesting to compare it with Moscow - nearly the same area, but 4 times smaller population and plenty of badly used space (like Tegel airport). Will it be able to keep growing while maintaining high living standards?

Re: Berlin approves 5-year rent freeze

#364

Post by drak0n1c »

baxtr wrote: post #328
2T1Qka0rEiPr wrote: post #22

As 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…

I am not sure if building houses is the solution. Wealthy people from around the globe will still buy them to rent them out for a profit or let them just sit there empty to visit for 2 weeks a year. There is even a name for that effect, it is called "induced demand". See: https://en.wikipedia.org/wiki/Induced_demand

Lacking new construction they'll buy up the larger, older family homes as investments instead. That's what happened to San Francisco with its lack of development. If a foreign investor invested $1 million dollars into real estate, isn't it preferable for it to be a few small units in a highrise rather than a good part of a traditional residential street?

Re: Berlin approves 5-year rent freeze

#365

Post by jotm »

TremendousJudge wrote: post #325
jimmaswell wrote: post #309

Earlier quoted context omitted.

I don't buy any of this. Growing up everyone around me saw the city as somewhere you begrudgingly went out of necessity and only lived there if you had no choice, and I'm inclined to agree. In virtually every aspect I find more countryside-ish living much more pleasant. Consider virtual reality and remote work. I imagine much of the workforce will move to virtual offices in the near to medium-far future when corporat…

>Growing up everyone around me saw the city as somewhere you begrudgingly went out of necessity and only lived there if you had no choice I assume you grew up in the United States?

Cause European cities are so much better? They're not. Overcrowded, overpriced, just for jobs and getting out asap.

Re: Berlin approves 5-year rent freeze

#366

Post by ernst_klim »

2T1Qka0rEiPr wrote: post #22

As 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…

>in general they're clearly very effective.

Oh yeah. Like, it's nearly impossible to find a place to live. Economics 101, true, artificially lowered price is leading to deficit.

Re: Berlin approves 5-year rent freeze

#367

Post by air7 »

2T1Qka0rEiPr wrote: post #22

As 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…

My take is that from an "economics 101" perspective, a rental isn't a normal commodity.

When a vacant rental is first advertised, it is essentially "put on the market" and it's price could be determined by supply and demand in a more or less fair way (assuming "gentrification" is just demand).

But signing a lease and renewing it are very different. For the renter, leaving a rental incurs a very real cost (searching for another place, packing, moving, stress, change of habits etc). It's true that there's also a cost to the owner but it's much smaller (adverting, viewings, risk of unknown tenants etc).

So the "rational" thing for the owner to do is to try and take advantage of this by hiking up the price to include the leaving cost of the tenant. If the market is left to it's own accord, it will cause this.

Of course freezing hampers with the fluidity of the market price. A good middle ground is a predetermined max price increase agreed upon in the lease.

Re: Berlin approves 5-year rent freeze

#368

Post by jotm »

jordanbeiber wrote: post #221
2T1Qka0rEiPr wrote: post #22

As 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…

It’s an interesting catch 22. The housing you make margins off are expensive housing in expensive locations. The reason to keep rents affordable is that it’s generally a good thing in terms of keeping gentrificarion and segregation in check. Cap on rent can’t be the only policy though. I see the exact same situation in Stockholm, and there’s a concensus that profit margins are not good enough. How to solve it? Either…

Encourage people to buy land and build their own houses?

Re: Berlin approves 5-year rent freeze

#369

Post by jotm »

odiroot wrote: post #267
oezi wrote: post #248

There are a lot of factors at play here: 1.) Supply is inelastic because construction work and building approvals are limited by current capacity. It is not feasible to expect the market to react as quickly as 600,000 new inhabitants over 10 years required. 2.) A lot of policy is still considering this to be a fad before cities become less popular again. Berlin's plans had for instance foreseen falling demand for sch…

> Berlin at its peak (1944) had still more than half a million more people. Yes, with 2 - 3 times more flats per every floor in a building. And with whole multi-generational families living in every one of them. Don't forget sharing one bathroom between all this families and sometimes toilets just being wooden huts outside. Try visiting Mitte Museum in Gesundbrunnen, you'd see how miserable pre-war housing was, yes e…

Sounds like Britain. Today.

Re: Berlin approves 5-year rent freeze

#370

Post by baxtr »

nerfhammer wrote: post #344
baxtr wrote: post #328

Earlier quoted context omitted.

I am not sure if building houses is the solution. Wealthy people from around the globe will still buy them to rent them out for a profit or let them just sit there empty to visit for 2 weeks a year. There is even a name for that effect, it is called "induced demand". See: https://en.wikipedia.org/wiki/Induced_demand

Are you saying that shortages are not reduced by having more of the thing that there is a shortage of?

It is at least clearly like that with roads (see Wikipedia link). With housing I can imagine a similar effect.
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