Beyond the obvious: How politics destroyed the Berlin housing market

In Berlin, the signs point to a government that actually believes that the problem of a lack of living space and the resulting rising rents can be solved by nationalizing existing apartments. If there was any need for further proof of how poor economic understanding is in the country, then this is it.

However, the plans of the possible red-green-red alliance fit into a chain of political decisions that have already contributed to worsening the housing problem over the last 15 years.

Studies show that a rent cap reduces the supply of apartments and thus increases the housing shortage. Yes, those lucky enough to own homes enjoy below-inflation rent increases, but for those new to the market, it creates even more shortages.

The supply is falling through various channels: Tenants stay in their apartments because the brake reduces their rent significantly below the market price, owners decide not to rent out or prefer to sell the apartments to owner-occupiers. New construction is being restricted - despite all the politicians' assurances that newly built apartments will be exempt from the rules - because investors know that it is only a matter of time before they will fall under them.

Daniel Stelter speaks with the economist Dr. Mathias Dolls from the ifo Institute talks about how expensive Berlin's housing policy already is today, how to relieve the burden on tenants without exacerbating the shortage, and what needs to happen so that those looking for an apartment finally have a real chance again.