> Together, these findings suggest that even a temporary and ultimately unconstitutional intervention can have durable effects when it changes expectations about future regulation and the stability of property rights. From a policy perspective, the results highlight a fundamental tradeoff. Rent caps and expropriation policies may generate short-run equity gains. Our distributional analysis in Appendix G shows that low income households benefit most in relative terms, while high-income households gain most in absolute terms. However, the uncertainty such policies create can discourage investment, shift portfolio allocation, and reduce housing availability. The Berlin episode illustrates that the credibility and stability of housing policy may be as important as the specific instrument used. Designing effective and sustainable housing policy therefore requires attention not only to the direct effects of regulation on rents, but also to the expectations it creates and the long-run investment responses it induces.
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> Together, these findings suggest that even a temporary and ultimately unconstitutional intervention can have durable effects when it changes expectations about future regulation and the stability of property rights. From a policy perspective, the results highlight a fundamental tradeoff. Rent caps and expropriation policies may generate short-run equity gains. Our distributional analysis in Appendix G shows that low income households benefit most in relative terms, while high-income households gain most in absolute terms. However, the uncertainty such policies create can discourage investment, shift portfolio allocation, and reduce housing availability. The Berlin episode illustrates that the credibility and stability of housing policy may be as important as the specific instrument used. Designing effective and sustainable housing policy therefore requires attention not only to the direct effects of regulation on rents, but also to the expectations it creates and the long-run investment responses it induces.