Hacker News Reader

Comment by Asmod4n | Hacker News Reader

They are building a massive amount of houses, but they are too expensive for the average Berlin citizen.

I don't know the details of the Berlin situation, but as long as someone lives in those new apartments (who would have lived in Berlin anyway), it helps with the housing shortage and prices. Someone moves to the new, most expensive apartment in the city, someone else moves to their now vacant slightly less expensive apartment, etc. At some point in the chain that means there's cheaper housing available.

This is a constant discussion in Helsinki, too. I think it's better to build expensive if that translates to good locations and high quality.

> Someone moves to the new, most expensive apartment in the city, someone else moves to their now vacant slightly less expensive apartment, etc. At some point in the chain that means there's cheaper housing available.

In The Netherlands there are actually quite a few people that don't want to upgrade from cheaper social rent housing to more expensive private rent housing. These people are called "scheefwoners", which to a Dutch person's ears make it sound like it's almost a criminal activity:

> Scheefwonen is a term that is used in the Netherlands for the living of people in a rental home despite their income being too high for that. So the tenants have an income that is too high for their type of home, so that they actually pay too little rent. With a given housing stock, the downside is that there are people who live in a rented house whose rent is high in relation to their income, which is undesirable for the residents themselves and / or socially in connection with the housing allowance. It can also play a role that the rent is low compared to the characteristics of the home. The Key Publication on the Dutch Housing Survey “Living in Unusual Times”, published in April 2013, showed that the number of households in rental homes with a rent below the deregulation threshold and an income higher than € 33,000 in 2009 was approximately 790 thousand.

Of course these people might have pretty good reasons why they prefer to keep living in cheap social housing. Perhaps these people want to save/invest more of their income, perhaps they like their neighbourhood or perhaps private rent housing is just too expensive. Either way, I feel it's wrong to say that these people "pay too little rent based on their income". That almost seems to suggest a certain percentage of income should be spent on rent or mortgage, whether one chooses to or not.

Again, this problem could be easily solved by just building more houses, but this is also very difficult to achieve in The Netherlands, due to ground speculation by municipal governments and a plethora of rules that a builder has to conform to when building new houses. This, combined with an average immigration of around 400-500 migrants a week means that for the next 15 years or so I don't believe this problem will be fixed, maybe not even in 30 years, unless some major policy changes are introduced. This situation is good for rent-seekers though, they will be able to ask a premium for a very long time.

Source: https://translate.google.com/translate?sl=nl&tl=en&u=https:/...

That's true, but your premises are wrong for most of the luxury real estate market in European cities (and likely elsewhere). Most buyers are investors in one way or another and for them it's good enough if they believe that prices will continue to rise.

But does it matter who owns the place as long as someone lives there? I mean I assume that the investors are renting them out. If not, surely they're losing out on a very nice income stream, and it's hard to believe it's all that popular. There are probably some empty apartments — that's a requirement for a working housing market, given that people need empty places to move into — but the proportion of empty investment vehicles in a city as large as Berlin can't be that large.

From what I've heard, the problem here is a bit with expectations.

Institutional investors have higher expectations of return of investment and are more likely willing to forego a small rent in the hope for a larger future rent. They have more deep pockets. And on top of that, expectations from an international market, which Berlin did not match. Investors are expecting that to change in the long run. And the funny thing, with a limited supply in housing and an increase of investors with such a behaviour, it is a self-fulfilling promise.

The number of empty apartments in Berlin is hard to guess. Not an expert in that matter, but from a quick search, the number is anywhere between 0.8% and 2%.

Yes, it is important to have apartments empty for some time, so people can actually move, but as I understand, that is excluded from those considerations/statistics. We are looking at apartments which are empty for more than three months (which is theoretically illegal in Berlin).

Ah, all right. A significant stock of empty apartments would certainly be suboptimal in a city like Berlin. I'm not a big fan of bans on things that don't cause direct harm to people, but I don't see any reason to not heavily tax apartments that are kept empty.

Sparked from the the post, I read a bit up on it, and actually 0.8%-2% is actually on the lower side. 2-3% is supposedly the right amount for a well functioning market according to a local government source.

Keep in mind, what I wrote about investors is what I heard from people living there complaining about. So more a reflection of the emotions there, then necessarily factual.

In Helsinki I'm wondering if building expensive buildings will make sure the 'bubble' won't break. Banks will just give people larger loans. Move to a situation like Sweden where you don't even intend to fully pay it back anymore. You're just renting from the bank instead of a landlord.

Same in Switzerland. The taxation laws and low interest rates lead to a perverse incentive where people get million CHF apartments that they never pay off because if they do pay it off their real tax rate would go up tremendously. So they just make interest payments on the debt.

> but as long as someone lives in those new apartments (who would have lived in Berlin anyway), it helps with the housing shortage and prices.

> At some point in the chain that means there's cheaper housing available.

Not at all: if you tear down a cheap apartment and replace it with a more expensive one the overall availability of cheap apartments decreases.

Reply on news.ycombinator.com