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Rent controls have split housing in Berlin into two distinct markets

bloomberg.com

11–20 of 724 posts

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

#11
post #7

I expected to agree with that article, but honestly the tradeoff seems reasonable. Given just the data presented there, is it actually worse if rent controlled apartments are hard to get if lots of people are also paying much less rent? I'd really want to see some data about lots of people wanting to move to or within Berlin who are not able to due to lack of supply. That data may well exist but isn't presented here.

> I'd really want to see some data about lots of people wanting to move to ... Berlin who are not able to due to lack of supply.

Even if there were those lots of people unable to move, would that actually be a problem in various cases? Unlike many other European countries, where the countryside has emptied out and brain-drained as its young people move to the big city, Germany has managed to keep many of its small towns viable places to live and work.

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

#12
post #9

This is an opinion piece in bloomberg, a pro-business, pro-wealthy publication. Is there any surprise that they dislike rent controls?

This is true. Same logic goes for anti-vaxxers and doctors. Of COURSE doctors recommend going to doctors. They WOULD say that.

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

#14
post #4
post #3

If only there was a science that could have predicted this.

the dismal science

It is only dismal if you think money should grow on trees which seems to be the premise behind FED policy today.

Is physics "dismal" because we can't have free energy or perpetual motion machines (that can do work)?

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

#15
post #7

I expected to agree with that article, but honestly the tradeoff seems reasonable. Given just the data presented there, is it actually worse if rent controlled apartments are hard to get if lots of people are also paying much less rent? I'd really want to see some data about lots of people wanting to move to or within Berlin who are not able to due to lack of supply. That data may well exist but isn't presented here.

Is it worse if now there is a special class of people who happened to be in the right buildings at the right time when this law passed who will now forever get discounted rent, leaving everybody else to pay full price?

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

#17
post #7

I expected to agree with that article, but honestly the tradeoff seems reasonable. Given just the data presented there, is it actually worse if rent controlled apartments are hard to get if lots of people are also paying much less rent? I'd really want to see some data about lots of people wanting to move to or within Berlin who are not able to due to lack of supply. That data may well exist but isn't presented here.

Is it worse if now there is a special class of people who happened to be in the right buildings at the right time when this law passed who will now forever get discounted rent, leaving everybody else to pay full price?

This sounds a lot like land ownership.

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

#18
"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 in Berlin's city center were already impossible to finance for most people before the regulation started. So their complaint is like saying "most people cannot afford a home in Pacific Heights" which is true, but irrelevant to the regulation.

"There was also an acceleration of apartments going up for sale, as landlords tried to cash out of their now less profitable investments." You know, for the families trying to live there, that is amazing news!

"the landlord tends to sell the unit rather than re-let it" Wasn't that the goal of the regulation, to increase home ownership by those living there?

"The biggest question is whether this episode of left-wing populism has damaged confidence in Berlin’s real-estate market permanently. If investors fear that local property rights will be put at risk in every election, they might stop building houses in the city at all." Oh wow. I'd wager that 99% of those living in Berlin won't mind if international investment corporations build their overly shiny and overpriced apartments somewhere else.

And lastly, this article appears to not mention one critical thing about Berlin at all, which is "Wohnungsbaugenossenschaft". Regular families joining a non-profit to construct apartment buildings for their own use together. One of the goals of this regulation was to boost that, and scaring away for-profit investors might just be the way to make space for non-profit investments.

I don't blame Bloomberg and Ifo Institute for delivering what their customer base wants to read. But it would be foolish to treat this as objective reporting.

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

#19
Whether or not this succeeds or is a disaster a) depends on what wants the outcome to be like, and b) when this is settled in court. As of now house owners (and remember: we talk mostly investment companies, not individual persons) are encouraged to speculate that the court overrules rent controls and (somewhat illegally) hold back appartments from the market. Once this is settled one way or the other these flats will be available on the market again, and if rent control survives, at somewhat acceptables prices.

Remember that rents did increase ~300% or so over the last 15 years, but income maybe only 10 or 20%.

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

#20
post #7

I expected to agree with that article, but honestly the tradeoff seems reasonable. Given just the data presented there, is it actually worse if rent controlled apartments are hard to get if lots of people are also paying much less rent? I'd really want to see some data about lots of people wanting to move to or within Berlin who are not able to due to lack of supply. That data may well exist but isn't presented here.

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
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