Opinion Piece
In Germany, the average living space per capita is 55.4 m², and for single-person households it is as high as 73.2 m². My thesis: The misallocation of living space is greater than the housing shortage. The reason: This misallocation is partly due to rent regulations, which largely override the price mechanism that normally controls supply and demand. The regulation of prices creates imbalances, as is evident in Berlin and other highly regulated markets.
The current housing shortage is caused less by a lack of new construction than by inefficiently used housing. For example, many tenants hold on to disproportionately cheap old contracts without making full use of the apartments, which ties up additional supply. Overpriced furnished sublettings by “old tenants” have become a business concept in which only the owner complies with the legislation and also bears the economic risk of the property. Based on empirical studies on the Zurich and Stockholm housing markets, if the price mechanism were to be reactivated in Berlin, up to 15% of the misallocated living space could be released – this would correspond to around 300,000 housing units.
A look abroad shows the possible successes of market-oriented reforms: In Argentina, the abolition of rent regulation led to an inflation-adjusted rent decline of 40% and a doubling of the supply of housing. Even if the framework conditions in Argentina are not comparable to Germany, in view of the German housing crisis, it would make sense to reconsider these approaches instead of sticking to an extension of unsuccessful regulation as planned.
