[wuschel]

I was just wondering. It's hard to understand markets, IMHO, and I have no feeling how a potential balance between cost of money, supply and demand should look like in a sector like housing. Do you have any references or literature that would give me a better understanding?

Originally, I also thought that proper restriction of foreign investment might be a good solution. I agree with you that it must be domestic actors that are to drive prices upwards.

On a social level, this is going to generate a lot of problems, as it locks out people w/o access to credit to take part in the market. It is crazy what happens in cities like Berlin in regard to gentrification. But even other cities that do not have a hype status are affected by this.

[sokoloff]

> it locks out people w/o access to credit to take part in the market

I think it’s been 40+ years since everyday people without any access to credit had broad practical access to buy housing. (This kind of makes sense. You’re buying something with 50+ years of future utility and probably haven’t saved 25+ years of housing costs to put down in cash.)

[ChuckNorris89]

>It is crazy what happens in cities like Berlin in regard to gentrification

Can you elaborate on this?

[wuschel]

Sure.

In the case of Berlin inner city districts like Kreuzberg, Prenzlauer Berg et cetera have been rapidly changing in the last 10 to 20 years. This is in part because population is dying off/moving away, but also because developers are buying apartments and are actively removing the old inhabitants in order to be able to charge higher rents.

There are laws in Germany that regulate the increase in rental payments. However, with the current price levels in housing, only a new contract with a tenant can give an investor an income that justifies the price payed for a property. The 'historic' population that can not afford the new level of rent is pushed out to the outskirts of the city [1].

Other cities of this tier e.g. London have similar population and price effects.

[1] "Plattenbau" in Berlin - not so trendy. See: https://www.bz-berlin.de/media/plattenbau-sanierung-in-marza...

[MichaelZuo]

How does the regulation work for properties after major renovations? Can the rent be increased significantly if it becomes more luxurious? What about when the landlord or close family want to move in, and then after a few years moves on?