In front of the criminal court in Moabit, supporters of a left-wing housing project in Köpenicker Straße protest against its eviction. A woman holds a sign with the English inscription “A roof or your head a basic human right”.
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LONDON — Rent controls are becoming increasingly popular in many European nations, but experts note that they rarely solve housing crises on their own and can even scare investors away.
Rent controls are government policies, whether on local or a national level, that aim to cap house price increases. They are intended to keep housing affordable, at least for the most vulnerable parts of a population. However, the policy has its critics.
In Sweden, for example, rent controls effectively toppled the government there. In Germany, the matter was subject to a year-long legal battle. Meanwhile, lawmakers in the Netherlands, the U.K. and Ireland have all had similar discussions about their property markets.
Speaking about lofty prices in the Netherlands, Nic Vrieselaar, a senior economist at RaboResearch, told CNBC that the market is “becoming unacceptable.” “This is a matter of supply-demand due to the low interest rate environment,” he said.
There’s an age-old trend of people flocking to urban areas where there’s more jobs and higher salaries. But, at a time of low interest rates from central banks — which European nations have experienced in the wake of the sovereign debt crisis — and help-to-buy schemes, more people have bought property, either as a first home or as an investment to let. This demand then pushes up prices given the limited housing stock on the market.