Correction: It's a reflection of demand from people who already live in Berlin. That's who were allowed to vote in the referendum.

They don't care about the elasticity of the market, or the demand from people who would want to live in Berlin in the future.

They already have an apartment, and at pretty low prices because nearly everything built before 2014 is subject to rent control,

I'd guess most people just voted for it because in their eyes "government promised to take apartment from my landlord and lower my rent even more".