Braking bad

WHO doesn’t like affordable housing? Press reports about sharp rent rises in big cities prompted Germany’s two biggest parties, upon forming a coalition in late 2013, to attempt to turn into law the irresistible proposition that everyone should be able to put a roof over their head without hardship. The result is a “rent brake”, due to be applied later this year, which limits increases in prices. As with all price controls, it is likely to lead to a black market, while crimping supply. That, in turn, would hold back investment in an economy that needs more of it.

Germans buy cars, not houses: just 46% of Germans own their homes, the lowest rate in the European Union. But the idea that this nation of renters is being squeezed by greedy landlords is not borne out by the data (see chart on next page). In fact, Germans have done rather well from renting: apartments have grown even as families have shrunk. In the former West Germany (for which data go back furthest), apartment size per inhabitant has more than doubled since 1956-57, from 18 to 39 square metres. Meanwhile, throughout Germany, the proportion of net pay spent on rent has stayed constant for 30 years, at about 23%.

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