3 ms·
I think this is a little too simple to be correct. For those who aren't familiar with the details, German law makes the cities compute and update a set of aver
by Arnt 2y ago
I think this is a little too simple to be correct.
For those who aren't familiar with the details, German law makes the cities compute and update a set of average rents based on location, standard and IIRC four other criteria. It's a fairly comprehensive set of prices. Then there are separate sets of rules for when ① an existing rent is below that level ② an existing rent is above and ③ a landlord and tenant sign a new contract.
The third case is the most interesting, because it restricts landlords to asking for 10% over the computed average for that kind of apartment. This limits inflation, which I think is the reason the German word for it is "Bremse" (brake). Effectively, landlords can double their asking prices in ten years but not in two. Is that so strict that it explains why there's little new construction? I suspect not.
I suspect that there are several reasons, and that the demographic trends are more important than the restricted inflation. Landlords can read the graphs and see that there'll be fewer would-be tenants in 20-30 years.
- mytailorisrich 2y agoNot sure what is too simple or incorrect... Prices are skyrocketing (even if using a 'loophole') because that's what the market can bear. There is high demand able to pay vs. restricted supply. And, again, rent controls are not going to solve the underlying issue because they factually always do the opposite of what is needed to bring inflation down. Rents are always going to be expensive in top tier cities, and supply always restricted anyway. So perhaps this are simply the real market prices without rent controls...
- Arnt 2y agoThere's high demand now but a new building has to earn its keep for many decades. They're skyrocketing because of x, and x is because of y, and y is… the ultimate reason is that too little is being built. AFAICT too little is being built because while it's easy to find tenants for a new building now it'll probably become difficult within the lifetime of a new building.