Symptom: rents are too high
Cause: insufficient housing supply
Solution: disincentivize new construction?
Cause: insufficient housing supply
Solution: disincentivize new construction?
Oh but half the city is under construction work right now, they're building shopping centers, offices and hotels (I can count at least 6 10+ storey buildings being constructed in a 600m radius from my place, only one is for flats)
Investors want to max out how much money they make, tourists bring way more money than the general population, especially in Berlin
Average joes, especially those who want to live in the city but cannot afford it, do not get a seat at the table.
Housing isn't profitable, so it's not being built. And more and longer rent freezes will worsen the problem.
The developers are being very rational here in what they're choosing to build.
Why aren't we trying to fix the supply problems, instead of trying to... what are we trying? I don't understand the whole ideology that sees any reasoning that could lead to this.
So maybe capping land prices and forcing sales for desirable schemes would work better. It will of course never happen as ownership is fundamental to our thinking in the west. I actually find the idea of the government forcing me to sell land I own at below market value quite offensive. I understand that is irrational.
Maybe this problem is quite complicated?
The people who are abusing the system are equity investors who demand a return on their investment within as little as 2-3 years, leading to unrealistically high rents. All rent control is doing in this case is forcing investors to take a longer period of return.
It's called LIQUID for a reason. If another place has better investment opportunities, the investment will simply cease. Why would anyone take their LIQUID assets and put it into real estate (in german it's called IMMOBILIEN, meaning immovables to make it clear) in a place that actively discourages return on invest?
I was pondering a high annual ground tax instead of a capital gains tax
Something neat I've noticed locally is that condos with high property management fees have proportionally lower selling prices.
If all 2 bedroom units in an area/city are $3000/month and one building had property management fees of $1000 instead of $500, the unit's value is $500/month lower (approx. $100,000 selling price).
I'm not sure how that would be implemented on a city scale though.
For density: If you drastically raise property taxes to be proportional to square footage instead of appraised value, you instantly incentivize higher density building. If you're paying $1000 tax per square foot of ground floor, you can spread that over a single floor, or 40 floors.
Was that your thought?
Property tax is just now being redone in Germany. Unfortunately it seems that it might end up depending on the square meters of the house, not the underlying property.
I have the option to buy a rental property in Berlin, I can either buy an old rental property and not be allowed to increase rents for 5 years. Or I can buy a new build rental property (which already sell for above market value in most places), and can charge more rent but I will be less able to find renters as they are looking to lock in 5 years worth of zero rent increase.
I really don't get how either situation encourages me to become a landlord.
Cities don't want or need more landlords. It needs more landOWNER residents.
- I can move out when my life circumstances change.
- I can move out when the district changes.
- I don’t need to take a credit just for living somewhere.
- I don’t need to worry about people renting my apartments.
- I don’t need to worry about maintenance.
If you have the money to buy fine, but for most people renting is way better.
I personally agree with you, but thats my specific lifestyle, and I put my money into other investments. But generally, owning a house is a good place to park your assets if you live a "typical" life.
One of the biggest reasons I want more landOWNER residents? So that my neighbours actually care what's happening in the neighborhood+condo, and do something about.
I'm renting from a Chinese investor. He doesn't speak English and doesn't have a clue what's going on around here, and doesn't care to get involved with helping things run better.
I can communicate my issues with the real estate agent who handles the unit for him, but he's just going to shoot off a short email and move on with his day.
Over 50% of this building is this way. The board of directors has a huge accountability issue because of this, and residents and owners are suffering for it.
If you rent, you care what happens locally, but you have no say.
(Granted, demand for existing housing should increase if they are cheaper, but presumably supply will decrease as well as fewer people living there will move out - so I guess it shouldn't affect the pricing of new housing much?)
But there's a funny thing about investors: They look at what governments have done in the past to judge the risk of things happening in the future. Set a precedent that you'll meddle in the market for political reasons, and every potential real estate investor will be worried that you'll do it again in the future -- even if you're not doing it to them yet.
In Berlin there's many cases of people being pushed out of their homes because of rent increases, people having to do apartment tours with 50+ other people and having spill all details about their private lives to have a chance at being chosen, etc.
The situation's crappy already. Even if the current tenants will be protected, that's already a small victory.
The same logic applies to planning new underground lines and keeping the city airport functional.
Don't expect rational decisions from this city.
Legislative efforts to limit prices pretty much guarantees that additional capacity will not be forthcoming and that shortages and high prices will continue.
Presumably you also believe that government bureaucrats are somehow better able to ascertain exactly when to stop issuing building permits so as to avoid "overbuilt" construction. And of course they will know when to resume issuing building permits also to ensure there are no shortages.
How is it that these government bureaucrats are better able to predict demand and arrange for supply than market mechanisms and the free economic choices of individuals?
You are making an argument for a planned economy over a free market, for limiting the freedom of individuals to invest as they see fit with their own resources in favor of giving power to government employees to block or to subsidize their favored economic activity.
The historical track record for central planning is overwhelmingly negative. I don't understand why people continue to advocate for it.
Strawman. That is not the question here.
And now you are suggesting that my assumption that you were implying that the government should do the allocating is also incorrect.
So what is your alternative suggestion?
Wrong. Please read what I write instead of "presuming" what I might think.
Aside from regular market issues, there could be a number of external factors (i.e. non-berliner ownership) that might be exacerbating the problem.