Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Rent controls have split housing in Berlin into two distinct markets

bloomberg.com

Post reply on HN
Print view View original

81–90 of 724 posts

Re: Rent controls have split housing in Berlin into two distinct markets

#81

Post by gruez »

logimame wrote: post #63
robertlagrant wrote: post #13

> 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.

Okay, I'll try. Given the unmeasurable social costs of people starving and dying when there isn't enough food (you can say similarily for people not having houses and freezing to death when there's a blizzard, but also read the sidenote at the end), the capitalists involved in selling and distributing food should not be compensated equally in monetary terms (by selling at higher prices) when there is a shortage of fo…

I read your entire comment and despite being three paragraphs long I can't see how it addresses gp's point, which is that the scarcity is still there whether you institute price controls, and instituting price controls only changes the symptoms.

Re: Rent controls have split housing in Berlin into two distinct markets

#82

Post by tom_mellior »

gruez wrote: post #78
sudosysgen wrote: post #66

Earlier quoted context omitted.

This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Indeed, the vast majority of increase in housing prices is because rents are so high that 7% YoY returns are possible. Without these returns, then there is no way to just…

>This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. No, as we seen in north america that's not really true. Homes can go up on speculation alone. >You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Is homeownership a necessary component of this? Creating a insane level of…

> If there are more units then there are renters, prices have to fall to meet demand.

Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future.

It's not exactly the same, but around here there is a huge oversupply of spaces for shops/restaurants. Owners prefer to keep them empty rather than have someone give them money.

EDIT: Well, maybe it's not actually oversupply. There might actually be a lot of demand, but not at the excessive prices landlords demand.

Re: Rent controls have split housing in Berlin into two distinct markets

#83

Post by AnimalMuppet »

syats wrote: post #31

Let us recall that that inflation in Germany is close to 0. Thus, saying that policy X is responsible for a price hike is hilarious. There is no reason to raise the prices of unregulated apartments (second plot), except the greed of those owning the units. Another way to read this article is "this rent control is bad because we real-state speculators are now focusing our greed on a smaller number of people, instead o…

> Let us recall that that inflation in Germany is close to 0.

OK.

> Thus, saying that policy X is responsible for a price hike is hilarious.

Not so fast. If inflation is close to 0, and policy X is introduced, and then price hikes show up in a category subject to policy X, why is it hilarious to say that policy X is responsible? Why is it not reasonable to at least suspect X?

Re: Rent controls have split housing in Berlin into two distinct markets

#84

Post by sudosysgen »

gruez wrote: post #78
sudosysgen wrote: post #66

Earlier quoted context omitted.

This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Indeed, the vast majority of increase in housing prices is because rents are so high that 7% YoY returns are possible. Without these returns, then there is no way to just…

>This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. No, as we seen in north america that's not really true. Homes can go up on speculation alone. >You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Is homeownership a necessary component of this? Creating a insane level of…

I'm not speculating at all. The article has the data to back the facts : house prices went down in Berlin.

Yes, homes can go up on speculation alone, but this is a bubble that will pop. In North America, rising rents act as a backstop that prevent the bubble from popping, because of guaranteed rental incomes that protect you.

It's not possible to create an insane level of supply for appartment rentals. There's two reasons for this. Firstly, there's the obvious limit to how much you can build within a reasonable commute time with reasonable infrastructure at a good quality of life. Secondly, studies have shown that 10% increases in supply lead to 1% decreases in price, more or less. Coupled with 4% rent increases over inflation every year, it's just not feasible to rely on additional supply.

In the real world, free markets lead to rent increasing right up until the level where too many people are in poverty due to high rent. That's because the natural increase in rent is simply too high to be counterbalanced by supply.

That's why from the worst planned cities to the very densest like Hong Kong, housing stays more or less as expensive as it can be without people moving out due to poverty.

The only solution is to make real estate a barely profitable or depreciating asset. This is done here by aggressive rent control. As renting stops being so affordable, apartments are sold, homeownership increases, and renting becomes something you do to prevent depreciation, not to make profit.

Crucially though, here, building more apartments stays profitable, because they can go to homeowners or to people who buy housing as a stable asset (and then rent it out). Coupled with public housing, you can get the best possible trade-off.

Re: Rent controls have split housing in Berlin into two distinct markets

#85

Post by dang »

wendyshu wrote: post #47
crote wrote: post #26

"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?

Hey, can you please omit personal swipes from your HN comments? We're trying for something quite different here: https://news.ycombinator.com/newsguidelines.html.

If you know more than others, that's great. If you're going to post about it, please share some of what you know so the rest of us can learn. Just putting the other person down doesn't help, and poisons the atmosphere.

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

Re: Rent controls have split housing in Berlin into two distinct markets

#87

Post by jdminhbg »

syats wrote: post #31

Let us recall that that inflation in Germany is close to 0. Thus, saying that policy X is responsible for a price hike is hilarious. There is no reason to raise the prices of unregulated apartments (second plot), except the greed of those owning the units. Another way to read this article is "this rent control is bad because we real-state speculators are now focusing our greed on a smaller number of people, instead o…

> Let us recall that that inflation in Germany is close to 0. Thus, saying that policy X is responsible for a price hike is hilarious. There is no reason to raise the prices of unregulated apartments (second plot), except the greed of those owning the units.

This is a "not even wrong" attempt to connect inflation with supply and demand.

Re: Rent controls have split housing in Berlin into two distinct markets

#88

Post by aphextron »

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves).

Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty clear by the tone of this article which side the writer lands on.

Re: Rent controls have split housing in Berlin into two distinct markets

#89

Post by standardUser »

The goal of rent control - or more accurately rent stabilization - should be to smooth out fluctuations in rent over time, not to create a class of housing stuck below market in perpetuity. Most of what people object to about rent control isn't the attempt to stop families form suffering wild rent increases that can destabilize entire neighborhoods/workforces, but rather to smooth out those increases to give families a proper chance to adapt or move.

Re: Rent controls have split housing in Berlin into two distinct markets

#90

Post by 0x1DEADCA0 »

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

Once the evil rich pigs have lots of bread, more than even they can eat, do they then not start using it to purchase labor from the starving poor?
Post reply on HN