In the regulated market, the supply of apartments basically froze. Unsurprisingly, those tenants fortunate enough to already live in a rent-controlled flat are staying put. And whenever somebody does move out -- when moving to another city, for example -- the landlord tends to sell the unit rather than re-let it.

At the same time, listings in the unregulated market increased only marginally faster than in other cities. Tenants in those apartments are also discouraged from moving -- after all, where to? -- and anyway the supply of fresh housing is still constrained by construction schedules.


These data confirm what economists had warned about -- and what's been observed in other cities that dabbled in rent controls, such as San Francisco or Cambridge, Massachusetts. The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups -- especially young people and those coming from other cities -- by all but shutting them out of the market.


The biggest question is whether this episode of left-wing populism has damaged confidence in Berlin's real-estate market permanently. If investors fear that local property rights will be put at risk in every election, they might stop building houses in the city at all.

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