And rents rising as a city becomes a more desirable place to live just makes perfect sense. If you are convinced that this will happen in your city maybe now would be a great time to buy a place?
Did you miss the part were they explained they can't do it because they only have a temporary assignment? This sounds a lot like "just be rich".
The reality is that a lot of people simply cannot afford to just "buy a place". According to some statistics [0], 40% of Americans (i.e. a "rich" country), are just one missed paycheck (or unexpected expenditure) away from homelessness. If you belong to the 60% that aren't and never experienced the situation, I understand how foreign the concept might seem to you.
[0] https://www.cbsnews.com/news/40-of-americans-one-step-from-p...
This is not true. The cap didn't apply to new flats. Which means that nobody wanted to invest and build new housing, but instead created artificial scarcity, there are a lot of empty buildings now because very few people can afford some of the abhorrent prices.
So yeah supply and demand totally worked. /s
The very opposite. The market optimizes for maximum profitability, not for maximum savings for renters or best quality of life.
There's a reason why governments have been building cheap housing across the last 100 years in most developed countries.
That said, I'm not opposed to the government building cheap housing. I think that's actually the best solution to an undersupply of housing.
You are simply rehashing the idea that free market is holy and magic. Instead, housing is inelastic. Also, apartments are non-fungible goods.
Furthermore, they have a ton of externalities. (e.g. access to transportation, shops, workplaces, schools)
All of this breaks every assumption around free market theory. Unsurprisingly, governments intervene heavily in the housing market almost in every developed country. The only exceptions lead to a combination of slumslords exploiting the poorest people and gated communities for the wealthy.
Housing is not inelastic at all. Economists have studied the effects of laws reducing land-use rights, and have found they impose massive social costs, in the form of less housing construction, that leads to less affordable housing.
You mean that decreasing housing supply correlates with increasing price?
Because that's exactly what inelastic demand is: https://www.investopedia.com/terms/e/inelastic.asp
Not everyone can just buy a place, if rents keep increasing only rich people will be able to afford living in the city, you need a lot of non-rich people to actually run the city though: cashiers, nurses, teachers, firefighters etc. It's not that easy.
The market forces you refer to are fictitious. What happens in reality is that the middle class is dwindling, there is an ever increasing divide between land and house owners and mere renters, and at some point in the more distant future the whole system will break down.
This was artificial though, as landlords were waiting to know the outcome of this ruling. It's not like the apartments just vanished from existence.
The rent was not too low, it was perfectly okay for the previous owners and I can assure you they did not lose money. They made enough money to pay a company full-time to take care of the building and relations to the renters. They merely earned normal amounts instead of seeking a 1000% return on their investment like the guy from Bavaria. There are greedy and fair house owners, it's as simple as that.
The same is happening in my city (Baltics) too. We bought a new apartment 5 years ago in the city centre, at the time we paid €2250/m2 which was quite a lot. Now I'm seeing the standard price for new apartments being double that. The typical salary here is around €1000/mo[1], so these apartments are completely unaffordable to most people.
We were actually looking to upgrade (as we have a 1br apartment and now a kid), but we wouldn't be able to afford to buy a bigger apartment. Instead we bought land and are building a house on the outskirts of the city. We got lucky there too, as we completed the purchase right before COVID and apparently land prices have gone up a lot now.
You can still find barely affordable (usually older) apartments further out of the city, but if you want to live anywhere close to the centre you need to be earning a salary a good few multiples higher than the average.
[1] Thats for the country as a whole, but salaries vary a lot in different regions, so maybe for where I am it's higher.
Here is a little personal anecdote: I used to live in the center of Berlin Mitte when I was a student, had rented a Penthouse apartment for 450 Euro/mo incl. additional costs (but without water, gas, electricity). It was affordable. Then a Bavarian multimillionaire bought the house from the original owners. I was already abroad most of the time, so I didn't experience the loud works his people conducted to get old renters out. However, he did cut off my telephone cable, something the phone technician realized when I returned and was able to fix.
Later he threatened to build a balcony - "and this might take a long time" - unless I agree to pay a higher rent. The classic ugly move. I negotiated with him for a while and in the end the raise was not so bad. However, I realized that I have to get out anyway - he wouldn't stop until I'd have left, you cannot fight a landlord with evil intentions in the long run even if you're a member of renter protection like I was. So I left Berlin and never returned, not even for a visit. I never asked but would estimate the same apartment at around 1600 EUR/mo today, with an ever increasing tendency.
Now I live in another country, ten years have passed, and the same happens in the city I live in. Rents are rising continuously, I've already seen people photographing the houses in our street, several of them are being totally renovated, new apartments are always "luxury apartments" as if any local could afford these (it's a poor country, ca. 800 EUR average income), and an agent from Sotheby's Real Estate rang my doorbell recently to ask if I'm the owner of my apartment.
You cannot escape this trend unless you want to live jobless on the countryside. I'd buy an apartment like most of my colleagues if I had the money, but it would mean having liabilities for the next 20 years and I only have time-limited contracts in Academia.
It's frustrating to know there is a real risk I'll have to spend my later years in the most ugly suburbs and slums of an otherwise beautiful town, even though I have a rather decent salary in local terms, while most of these houses with unaffordable "luxury apartments" are bought by foreign investors. By the way, many of the new apartments are empty, apparently only serve as investments.