Seems to me it is working as intended. Now the only thing remaining is to build a lot of public housing to increase supply at affordable prices.
Rent controls have split housing in Berlin into two distinct markets
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Re: Rent controls have split housing in Berlin into two distinct markets
#42The alternative proposed by the article is basically : let it unregulated, the market will provide. Which is how it was before. Was the problem solved? No. Maybe it is not the right solution but I doubt very much the author is concerned by the problem. The article says only some places have their rent capped so the rents of the uncapped ones are skyrocketing. I am not convinced it is a solution cause I don't claim to…
> The alternative proposed by the article is basically : let it unregulated, the market will provide. Which is how it was before. Was the problem solved? No.
Sigh. Here's what the article actually says:
> The right answer to that shortage would be to increase supply — for instance, by cutting red tape in zoning and construction.
That's an alternative reform proposal, not going back to how things were before. I think it would work better than rent control, because increasing supply is better than haggling over fixed supply.
Edit: another possible solution is a land value tax. It's non-distortionary (doesn't lead landlords to reduce or increase supply) and prevents a lot of rent increase.
Re: Rent controls have split housing in Berlin into two distinct markets
#43Earlier quoted context omitted.
You also need to look at how many formerly rent controlled apartments have been sold and taken off the market. The charts don't really show that, but the articles suggests that is happening
If they are finding homeowners which are not renting them, is that not a good thing?
The purpose of this regulation is to provide cheap rent for the poor. Not to enable "the rich" to acquire new real estate which they then proceed to not rent out at all ... Increasing the number of homeless.
Now of course this legislation "prevented that", by refusing owners do this while tenants are in the apartments. Except the net result seems to be when tenants do leave, the apartments are taken out of the housing market altogether, exacerbating the already pretty critical problems.
And in the German press you will find accounts of pressure tactics (such as schemes to force tenants into default, "using" things like a divorce to kick people out (man signed contract, woman stays in apartment, gets kicked out when man refuses to pay but woman is not allowed to sign contract in her own name), creating critical maintenance problems ...) to create that situation.
So no, that is a very, very bad thing.
Re: Rent controls have split housing in Berlin into two distinct markets
#44"limiting profits is bad" says the worlds biggest pro-capital megaphone while referencing a company that usually does paid pro-business questionnaires. "As expected, rents in Berlin’s regulated market plummeted in relative terms." and "Newly built apartments have therefore become even more unaffordable for most people." They are not directly lying, but I'd count this as dishonesty by omission. Newly built apartments…
"Communism is bad" says everybody I have ever met who lived in a communist country.
Disclaimer : I am not supporting any kind of police state with state controlled production
Everybody you met had probably left because of so called "socialism", so you have quite a bias in your data. Have you heard of "Ostalagia"? There is still a not so small "communist" party in Russia by the way.
Re: Rent controls have split housing in Berlin into two distinct markets
#45> In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). This is the key statement to refute if you want to argue for rent control.
If the bread price explodes, poor people will starve and the rest of the population ends up paying a boatload of money to the lucky few bakers. If the bread price remains stationary, people will starve randomly.
People are going to starve either way, why not skip the whole "make the bakers filthy rich" part?
Re: Rent controls have split housing in Berlin into two distinct markets
#46I think this article is getting the interpretation of the facts all wrong.
They point to the predictable drop in supply in the regulated market as if it was a bad thing, but they ignore where that supply is coming from. Those are not newly-built apartments, because the price controls don't apply for new construction.
When an old apartment becomes available, it's because the previous occupant moved out, e.g. because they could no longer make rent. So making rents more affordable leads to fewer people having to move for financial reasons, which I think is a good thing.
Disclaimer: I live in a regulated apartment and don't intend to move, so it's probably not surprising that I like this policy.
Re: Rent controls have split housing in Berlin into two distinct markets
#47"Price changes in the regulated market dropped relative to those in the 13 other cities. That’s because real estate loses value if its future cash flows to landlords are capped. There was also an acceleration of apartments going up for sale, as landlords tried to cash out of their now less profitable investments." & "And whenever somebody does move out — when moving to another city, for example — the landlord tends t…
Maybe read an economics textbook before opining on economics?
Re: Rent controls have split housing in Berlin into two distinct markets
#48If only there was a science that could have predicted this.
the dismal science
Trivia: The term "dismal science" was coined when economists argued for abolishing slavery:
> Carlyle attacked Mill, not for supporting Malthus’s predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was this fact–that economics assumed that people were basically all the same, and thus all entitled to liberty–that led Carlyle to label economics “the dismal science.”
https://www.econlib.org/archives/2015/07/the_origins_of_1.ht...
Re: Rent controls have split housing in Berlin into two distinct markets
#49The graphs seem misleading or at least raises additional questions.
Yes, compared to the next 13 largest cities there seems to be a difference. However, the difference in graphs existed even before the policy proposal+enactment. The margin is also relatively small and only for a small timespan.
There should also be comparison to more comparable big cities like Munich, Cologne, Hamburg, or Frankfurt. Other cities are substantially smaller or have no (or even negative) population growth. Of cause the rent in those cities grows differently compared to Berlin. Thereby shifting the average.
Re: Rent controls have split housing in Berlin into two distinct markets
#50Yes why build an apartment in Berlin if they will just inevitably move the date for rent controlled buildings forward eventually.
I don't know... maybe because you need an apartment for yourself, and you now can afford to actually buy the lot because you do not have to compete with investors expecting a dividend of 20% on their investment?