The Economist outlines why rent control will only compound decades of failed housing policy.
The over-regulation of homebuilding in and around thriving cities is one of the great economic-policy failures of recent times. In London the median full-time employee renting the median two-bedroom flat works nearly half the year just to pay the landlord. In San Francisco rent is so high that a four-person household with an income of $129,000 might still qualify for federal handouts. Housing shortages like these have helped suck wealth away from young renters, fuelling tension between the generations. Supply restrictions have a high economic cost—by one estimate, curbs in just three successful cities lower overall gdp in the United States by almost 4%. As more and more voters find themselves on the losing end of property markets, they have also generated a political backlash. In America and Europe politicians are thus under pressure to reduce housing costs.
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