[hawos]

There are dozens of appicants for each flat anyway, with or without the cap.

Not everyone can just buy a place, if rents keep increasing only rich people will be able to afford living in the city, you need a lot of non-rich people to actually run the city though: cashiers, nurses, teachers, firefighters etc. It's not that easy.

[DangerousPie]

I know the market isn't perfect, but in theory if lowly paid workers can't afford to live in the city anymore they'll start looking for jobs elsewhere, which will force their employers to raise wages.

[jonathanstrange]

Sorry to be so blunt but that theory is really just false. There are no jobs elsewhere, the jobs are in the city. I'm also not a "lowly paid worker", I'm in the highest quartile of income in my country and work as a full-time researcher at university. Nevertheless, there is no cap on the rents in my area and they continuously increase even for my existing contract. They have increased sometimes by several hundred percent for new contracts in my area, so if we ever had to leave our current apartment, we'd be forced to spend more than 3/2 of our salaries on rent alone. Even relatively well-off families will have troubles getting affordable living space in the foreseeable future, thanks to AirBnB, hostels, and long-term investments into (right now mostly empty) luxury apartments. How the average family can do it in my country is mysterious to me, but I'd wager most of them only can because they have very old rent contracts which do not have in-built rent progression.

The market forces you refer to are fictitious. What happens in reality is that the middle class is dwindling, there is an ever increasing divide between land and house owners and mere renters, and at some point in the more distant future the whole system will break down.