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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 fe
by oezi 7y ago
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 schools due to demographic change and now rising birthrates (good economic situation) and influx of young people into cities are causing a trend change (for how long?).
3.) Current ECB rates are causing a housing bubble in Germany where many people are buying property for the first time. Because these properties are mostly rented when purchased but renters can't be terminated in Germany, the only way to evict is by raising rent until renters give up. Putting a rent freeze into place makes sense to prevent this and the rampant luxury renovations which don't create more supply.
4.) Berlin at its peak (1944) had still more than half a million more people and is surrounded by mostly empty countryside. It could easily grow to 10m as Paris or London.
- zanny 7y ago> a fad before cities become less popular again The only way this happens is if cities like Berlin putting rent freezes prevent construction that would increase capacity and lower prices to allow people to live in cities. There will be no new economic growth where people are spread thin - all future productivity will only emerge where people are. Any country trying to do anything but centralize their human capital in cities will find themselves at economic disadvantage going forward.
- oezi 7y agoOr technology (self driving cars, remote work) and social change (universal basic income) would not require you to live in a city to work there or work at all that productively.
- zanny 7y agoThe point is more than density is an optimization of the marginal cost of maintaining a person. Manufacturing all the autos, maintaining all the roads for them to travel on, and providing supply lines across vast areas of low density are immense ongoing expenses that are hugely reduced when people are centralized in urban areas. As we move towards remote work it should lead to density increases, not the other way around - living denser means more access to more recreation and services, should mean cheaper goods and infrastructure, and can stymie the isolation problem brewing with remote workers across the industrialized world.
- blub 7y agoRegarding 1: Germany's economy is doing well compared to the surrounding countries, so they're attracting many foreigners, especially in Berlin. These foreigners need a place to live, which is one big driver of rent increases. Regarding 3: landlords are successfully invoking the "right of own use" to evict tenants. They are basically claiming that they need the apartment for themselves, a relative, etc. [1] Furthermore, thanks a relatively recent law, the landlord can't raise the rent for older buildings indefinitely - there's a cap. New buildings are exempt. For those rents start high and there's a standard ~2.5% increase per year. [1] Article in German: https://www.spiegel.de/wirtschaft/soziales/mietwohnungen-eigenbedarfskuendigungen-nehmen-dramatisch-zu-a-1268257.html https://www.spiegel.de/wirtschaft/soziales/mietwohnungen-eig...
- odiroot 7y ago> 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 even in the very centre. The area around Ackerstr. was much more dangerous than Alex or Kotti is today.
- jotm 7y agoSounds like Britain. Today.
- dang 7y agoWould you please stop posting unsubstantive comments to HN? We ban accounts that keep doing this, and have already had to ask you more than once. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- sagichmal 7y agoThe notion that Kotti or Alex are dangerous by any coherent metric can only be understood as satirical.
- nickik 7y ago> 3.) Current ECB rates are causing a housing bubble People keep saying stuff like this but this is a economic theory with very little actual support in any evidence or even in most economic theory of how montary policy works.