According to Ifo President Clemens Fuest, a broadening of the rent‑cap would actually worsen Germany’s housing crisis. In a statement on Thursday he warned that such measures do not relieve the market; instead they deepen scarcity and hamper labour mobility. If fewer apartments are constructed and rent levels are frozen, young people and job seekers looking to move for new employment would be hit hardest.
Fuest’s analysis shows that rent regulation pushes back investment in new buildings and makes the use of existing housing less flexible. Prices for newly built units are on average about 30 % higher than for older properties across Germany and nearly 50 % higher in attractive large cities, which makes moving financially unattractive for many. This decline in mobility further tightens the rental market, as older residents tend to remain in oversized homes while younger renters find it harder to secure suitable accommodation.
For these reasons Fuest opposes additional tightening of the rent‑cap. He argues that the focus should shift toward policies that encourage new construction and improve the utilisation of existing stock. Only by boosting supply and making existing apartments more adaptable can housing demand and availability be balanced over the long term.