Adam is a beneficiary of Berlin’s rent-control policy - the Mietendeckel. While his landlord won’t be able to cover the interest costs on his mortgage anymore, Berlin’s left-wing government has set a rent it believes is fair for two high-income tech workers.
Berlin is the de facto capital of Europe. In the normal way, rents would rise to equal those in Manhattan or London. It will be intetesting to see how the fight against that particular future plays out. Of course it can only play out with serious distortions of normal market equilibrium. One obvious result, as stated, will be that the number of properties offered for rent will decline, exacerbating existing shortages. It might make more sense for the Berlin authorities to require all new developments, no matter how luxurious and up-market, to include a proportion of social housing. And to build more.
Berlin is the de facto capital of Europe. In the normal way, rents would rise to equal those in Manhattan or London. It will be intetesting to see how the fight against that particular future plays out. Of course it can only play out with serious distortions of normal market equilibrium. One obvious result, as stated, will be that the number of properties offered for rent will decline, exacerbating existing shortages. It might make more sense for the Berlin authorities to require all new developments, no matter how luxurious and up-market, to include a proportion of social housing. And to build more.
Very good analysis. Refreshing to see such comments in Germany, where most of the press has gone strange ways to the left.