More misery when freezing rents

Algemeen Dagblad

According to Sandra Phlippen, Assistant Professor at Erasmus School of Economics and Head for the Netherlands at ABN Amro’s Group Economics, freezing rents will only be counterproductive ‘The artificially low price will increase demand. Long queues and a flourishing market for illegal subletting are the result, while prices continue to rise.’

In her column Phlippen discusses the reality that house prices have risen so fast in the big cities that people who have always lived there can no longer stay. This problem is real and global, and is dealt with very differently by governments. ‘Take China, where the state simply limits demand by giving fewer people a residence permit for the city. As a result, demand for housing is declining and prices are stabilizing. In America, the problem is “solved” by doing nothing. There, the rent simply reaches the extreme level where few people can rent. That too stabilizes the price, but leads to more homogeneous group of residents of childless, super-rich yuppies.’

According to Phlippen, the Netherlands does not choose the Chinese nor the American approach. ‘We believe that the cities belong to the people who live there and we want politicians to ensure that this remains the case. But not matter how well-intentioned it is, freezing rents is only going to be counterproductive.’

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Read the entire article on AD.nl, 7 September 2019 (in Dutch).