Hacker News Reader

Comment by ClumsyPilot | Hacker News Reader

Population of Berlin has hardly changed in the past 30 years, it grows at an annual a rate of like 0.2%. How is this madness possible?

Edit: There were 3.5 million residents in 1993. It is projected to reach 3.6 million residents in 2029 [1]

It's got to be something to do with financial markets and foreign investment

1 - https://www.macrotrends.net/cities/204296/berlin/population

View on HN

Number of households would be the relevant measure here, not population.

Population can stay the same, but number of single people wanting to live alone means less people per dwelling, which means more demand.

Even if the population doesn't change, if more purchase power moves in (e.g. struggling artists move out, software developers move in) the market will go up.

Also, Berlin was an odd place compared to other cities in Europe, when it comes to housing. Looking from the outside it seems like it was due for an upwards correction after 3 decades of pretty low rents since the fall of The Wall.

'more purchase power moves in (e.g. struggling artists move out, software developers move in) the market will go up'

I don't understand what you mean or how it relates to supply and demand.

Rents are capped at the amount people can afford. If you earn €1000 a month as an artist, you can't pay €1500 a month in rent, no matter what supply and demand curves say.

Say there's a supply on 100 apartments and a demand from 120 artists. 100 will pay €1k per month, and 20 will have to leave the city. Landlords can't increase to €1050 a month because nobody can afford that.

If demand is higher than supply, rents will increase, but if the demand is entirely from people earning €1000 a month those rents won't increase past €1000 a month.

However you have a demographic on €5000 a month move in, they can afford higher rents. The same 100 apartments exist, and there's a demand from 120 people, but now those people are earning €5k a month. Rents thus shoot up to take all the money that can be spent on rent, because the alternative is moving out of the city and thus not being able to earn the €5k/month.

The people owning the property do well in this situation, and thus don't want supply to increase to the points that there is more supply than demand

Berlin's population has grown 10% in 10 years. The 20 years before that it was stagnating or some years even shrinking.

The points stand though because 10% over a decade should not be enough to shock a residential housing market.

The market of affordable apartments is shocked. In the luxury segment you'll find easily.

Where are you getting this data? It was 3.48 million in 2012 and it is of 3.57 million today, from what I can see

https://www.macrotrends.net/cities/204296/berlin/population

The simple answer is rent control: https://www.bloomberg.com/opinion/articles/2021-03-02/berlin...

The same old lie over and over again. Rent control is limiting the profit you can make with renting out. It doesn't stop profit in the first place.

And btw: new built appartments have almost free price setting.

I have friends who used to let their Berlin flat. They stopped doing it after the apartment-seizure law passed [1]. Better to lose the income than lose the property (or be caught fighting an illegal law).

[1] https://www.npr.org/2021/12/03/1061333538/berlin-voted-for-t...

What you're referencing is not a law it's a referendum that most likely will never be adopted as it's illegal. On top of that, how does that referendum affect your friends unless they run a giant business with thousands of apartments (to be exact 3000 or more)? And at that scale it's certainly cheaper to fight in court.

> is not a law it's a referendum that most likely will never be adopted as it's illegal

It reflects a political environment that makes renting risky. And illegal laws can still cause hardship while they're being stayed and struck down. The corporate landlords can afford to fight. Single-home landlords cannot. This time the referendum constrained itself to corporate landlords; next time it may not.

From the outside, this sounds scary. But if you look closer how germany works, forced selling to the state or city (at the current market price) is quite often happening in building infrastructure like streets, autobahn, railways or airports. If there is an overwhelming public interest, the rights of owners can be limited.

And btw: it's stated in the constitution, that ownership introduces also responsibility to the society.

> If there is an overwhelming public interest, the rights of owners can be limited

Eminent domain exists everywhere. Berlin’s politics are more extreme than the norm. Most homeowners would pay a low single-digit percent of their home value to insure against expropriation in that environment. Taking a property off the rental market is analogous; sacrificing a cash flow to safeguard the investment.

We can go back and forth on theory all day. I’m m reflecting what people I know are doing. Being flippant with (or even demonising) owners’ interests circles back into affordability crises worldwide, from Berlin to San Francisco.

Same in San Francisco. My old landlord never rented out my old place when I left (3 unit building). She was getting close to retirement and had gotten advice that the building would fetch 2-3x if fully unoccupied. So she was just waiting since giving up $40,000/yr in rent for a $500,000 higher pay off is an easy trade off.

People forget that you can always “price in” regulatory changes. Then you just see which path maximizes profit. What may seem ridiculous (leaving a unit empty) actually makes a lot of sense based on the rules.

The regulation gives absolutely insane incentives. In my case (old contract in hip mitte area), it was easier to keep it and for my gf to rent another apartment on the outskirt where her work is as she can deduct the full rent from tax. Effective price for renting two apartments is lower than one in between the center and suburb.

I don't see how that has anything to do with the rent control regulation? What would your expectation be without that regulation?

Doppelte Haushaltsführung is a tax relief for people needing a 2nd place close to work. Also the work of your gf needs to be at least 1 hour away from the main apartment [1], she has to pay at least 10% of the cost of the main apartment to be allowed to deduct it (and maybe more requirements that I'm forgetting right now). She also has to pay 15% additional Zweitwohnungssteuer on the rent of the 2nd apartment.

[1] https://www.haufe.de/personal/entgelt/verwaltungsregeln-zur-...

That's the problem -- rent controls usualy apply to only a bizarre arbitrary fraction of units, distorting the market instead of controlling it.

Rent control simply locks in a set of winners when it is implemented (which for the most part stays static and doesn’t apply to new demand), the government then has to promise that rent control won’t be implemented on new supply so developers, businesses, and private landlords just don’t give up on the rental market completely.

I don’t see rent control as very useful, but I doubt it is very relevant to the current housing shortages throughout the cities that have it either (given that the same problems apply to cites that don’t have it).

Would be so much better if you post a reference that's actually accessible without an account or even subscription.

Even better to post a reference on a basic economic issue that is not coming from basically the most biased perspective possible.

Sorry, I had no idea that there is a paywall. I use the extension[1] that removes majority of paywalls.

[1] https://gitlab.com/magnolia1234/bypass-paywalls-chrome-clean

Rent control needs means testing. It suppresses mobility when the googler making $300k doesn’t move to a place they’d rather have because their current unit is so far below market rate, which hurts the minimum wage worker who could have lived there.

Are there many googlers making $300k in Berlin?

Some management positions might do. The average SWE in Berlin is closer to 60..80k€

If there are 100 apartments but 101 people want one, no amount of rent control will house the last person.

Its a bit tough to talk about nothing changing in 30 years and not talking about unification, which makes it a completely different market. After the war East and West overbuilt Berlin to make it a showcase where economically it didn't attract a lot of people.

Reply on news.ycombinator.com