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Old 16.01.2015, 10:14
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Bad time to buy property in Switzerland – following currency fluctuations?

We made a verbal agreement to buy a property near Zurich yesterday morning (Jan. 15). We'd negotiated the seller down on price and he finally accepted our offer, (coincidentally) just as the SNB removed the CHF-EUR cap. The capital we were going to use to fund the purchase is in the UK, in GBP. Due to yesterday’s currency market developments, we now have much less capital than we’d assumed (about 14% less, as things stand). That’s not helpful, of course, but not necessarily a deal breaker. But now I’m concerned about the economic forecasts being made across Switzerland, with talk of a shrinking economy and potentially falling house prices. We don’t want to see our savings/pension go up in smoke if the Swiss property market depreciates by, say, 20%. So my question: Would you buy a Swiss property as things stand?
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Old 16.01.2015, 10:17
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

If I was living, earning and paying taxes in Switzerland and not planning to leave, yes.
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Old 16.01.2015, 10:27
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

You should have taken you GBP out 4 years ago when it was CHF2.40. No wait, 25 years ago when it was CHF 3.50 - or better still 40 years ago when it was CHF8.

The sad story goes on. There will be rises and falls, but the long-term trend is clear.

If you are here for the next 10 years +, you need somewhere to live, mortgages are an all-time bargain - and the £ could always fall further - it's a difficult one and I thought we made a big mistake selling a UK property in 1996 and buying here. It was one of the best decisions I made...
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Old 16.01.2015, 10:28
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

Too many variables we don't know about.

But mostly I would ask this: is the house worth the extra 15% or can you afford to wait for something cheaper?

Can you afford to lose that extra 15% of your money or will it put you in a bad spot?

House prices are the hardest thing to guess but since they are going up so many years now, probability is that at some point this will slow down or reverse. Whether you want to rent forever though is another variable.

Do what your wife says and you can't lose hahhaha
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Old 16.01.2015, 10:30
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

Do you know the reason the property is being sold? Are the sellers moving overseas? If so, you may have some scope for renegotiation on the price as they will be up more than 10% on the currency changes yesterday, and may be willing to pass on some of their good fortune.
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Old 16.01.2015, 10:42
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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You should have taken you GBP out 4 years ago when it was CHF2.40. No wait, 25 years ago when it was CHF 3.50 - or better still 40 years ago when it was CHF8.

The sad story goes on. There will be rises and falls, but the long-term trend is clear.

If you are here for the next 10 years +, you need somewhere to live, mortgages are an all-time bargain - and the £ could always fall further - it's a difficult one and I thought we made a big mistake selling a UK property in 1996 and buying here. It was one of the best decisions I made...

In 1947, it was over Chf 17 to the pound, as my father frequenty remined me when he was paying about GVBP 1.40 for his coffee !
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Old 16.01.2015, 10:46
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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Do you know the reason the property is being sold? Are the sellers moving overseas? If so, you may have some scope for renegotiation on the price as they will be up more than 10% on the currency changes yesterday, and may be willing to pass on some of their good fortune.
Yes because that's exactly how the world works.

"Yeah I'm feeling much richer now, thanks I wont be taking all of your money"
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Old 16.01.2015, 10:54
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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Yes because that's exactly how the world works.

"Yeah I'm feeling much richer now, thanks I wont be taking all of your money"
If I were a seller in this position I would be thinking 105% of something is better than 0%. Wouldn't you? The OP has no obligation to buy and is within their right to renegotiate. The point I was trying to make is that it could be a win for the seller, and the OP could potentially remove some of the losses incurred on yesterday's fx fun and games.
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Old 16.01.2015, 11:10
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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If I were a seller in this position I would be thinking 105% of something is better than 0%. Wouldn't you? The OP has no obligation to buy and is within their right to renegotiate. The point I was trying to make is that it could be a win for the seller, and the OP could potentially remove some of the losses incurred on yesterday's fx fun and games.
A verbal contract is legally binding in Switzerland, wonder how you would feel if the boot was on the other foot ?

Works both ways !
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Old 16.01.2015, 11:17
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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So my question: Would you buy a Swiss property as things stand?
No.
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Old 16.01.2015, 11:21
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

First of all - thanks to everybody above for the useful replies. As a newbie, I haven't worked out how to thank posters directly yet...

Fair point about the "morality" of pulling out of a verbal agreement: all I can say in response is, the seller (an inheritor) will sell their place at some point and make a tidy profit, but I don't want to be signing away our entire savings.

I suppose these decisions are (and should be) more about your personal priorities rather than your financial ones. If you want to live in the house over the long term, buy it and just accept economic fluctuations, and if you don't, then don't!
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Old 16.01.2015, 11:27
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

See how much the penalty will be for backing out of the deal...

If the GBP losses another 15% tomorrow, what do you do than? You have to jump at some point IF you really want to buy a house. Bad timing, yes. But it can get worse, or better, who knows?
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Old 16.01.2015, 11:33
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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A verbal contract is legally binding in Switzerland

In Vaud at least, an offer on a property is not legally binding and can be withdrawn. That happen. You can even withdraw from the sale up to the point of the exchange... albeit you will lose the deposit paid.
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Old 16.01.2015, 11:35
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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Do you know the reason the property is being sold? Are the sellers moving overseas? If so, you may have some scope for renegotiation on the price as they will be up more than 10% on the currency changes yesterday, and may be willing to pass on some of their good fortune.
Great point.
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Old 16.01.2015, 11:36
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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First of all - thanks to everybody above for the useful replies. As a newbie, I haven't worked out how to thank posters directly yet...
You can't yet. Anatomy of a post: all those buttons and links, explained

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I suppose these decisions are (and should be) more about your personal priorities rather than your financial ones. If you want to live in the house over the long term, buy it and just accept economic fluctuations, and if you don't, then don't!
This is something that everyone was at pains to point out to us when we bought our place here - property is not an investment, prices may well go down, and if you buy new (not that we did) expect the values to drop by ~20% if you try and sell it a year or two later. Seems the Swiss place much more emphasis on newness than is so in the UK property market.

But even long-term it's not guaranteed that prices rise. I'm no economist, so I don't pretend to understand why, but when I look at the fact that one of the other apartments in our black, without the extra attic room that we have, was originally priced at around 30% more than we paid for ours, 30 years later, it puts it into perspective. Coming from the UK, our banker, solicitor and estate agents all wanted to make absolutely sure that we understood this.
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Old 16.01.2015, 11:37
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

If it helps anybody else in future: I have it on good authority, i.e. from a lawyer friend, that any verbal agreement is not legally binding and can be withdrawn. I've signed nothing yet. Withdrawing from the agreement would not be great behaviour, admittedly, but if we're left in a fix financially, I would do it...
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Old 16.01.2015, 11:44
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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We made a verbal agreement to buy a property near Zurich yesterday morning (Jan. 15). We'd negotiated the seller down on price and he finally accepted our offer, (coincidentally) just as the SNB removed the CHF-EUR cap. The capital we were going to use to fund the purchase is in the UK, in GBP. Due to yesterday’s currency market developments, we now have much less capital than we’d assumed (about 14% less, as things stand). That’s not helpful, of course, but not necessarily a deal breaker. But now I’m concerned about the economic forecasts being made across Switzerland, with talk of a shrinking economy and potentially falling house prices. We don’t want to see our savings/pension go up in smoke if the Swiss property market depreciates by, say, 20%. So my question: Would you buy a Swiss property as things stand?

Sean Connery put it well in the 1st reply above.
If you are buying this property to live in as a home for the long term & you earn in CHF then the concern about your pension/saving going up in smoke is less of an issue as any negative moves in the market may be normalised over time & it's your home not an investment so you should view it as a home.

If you are buying this property as a pureplay investment, assuming rental income & capital appreciation with a view to resell in the medium term then it may not be the right time to jump into Switzerland property.Also consider sliding capital gains tax applicable on any profits you make from reselling.

good luck either way, we are in a similar situation right now but have not identified our target property yet.
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Old 16.01.2015, 11:59
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

Thanks Horatio.

We're certainly not thinking about this as a short-term or speculative investment. We'd plan to be in this house for at least 6-7 years, and probably much longer. Nobody knows how life will pan out, and ex-pats have other things to think about (family developments in home country, job prospects, etc.) however, so the danger would be if we wanted to leave Switzerland in the medium term and found out we'd made a stupid decision.
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Old 16.01.2015, 12:19
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

RoadRunner,


Housing prices have been on a tear for the last 5 years. Are we at a top now? Nobody knows. Your timing is rather poor, as the franc's appreciation will most certainly impact the pricing of housing, to the downside. But that is the short-term. Pricing in the long run will be very much determined by the macro economy in Switzerland, Europe and the rest of the world. As long as 1) Europe continues to play a game of redistribution where half the population carries on its back the other half (i.e. high-tax regime) and 2)Switzerland continues its low tax policy, firms and people will want to reside here and the Swiss economy (and its housing) will do very well. If either 1) or 2) change, the impact will be brutal and all these new buildings you see popping everywhere will suddenly go empty.
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Old 16.01.2015, 12:31
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Re: Bad time to buy property in Switzerland – following currency fluctuations?

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If it helps anybody else in future: I have it on good authority, i.e. from a lawyer friend, that any verbal agreement is not legally binding and can be withdrawn. I've signed nothing yet. Withdrawing from the agreement would not be great behaviour, admittedly, but if we're left in a fix financially, I would do it...
I think you could argue Force Majeure maybe? "Sorry, guv, but the SNB has caused my money to be devalued and I can't afford to buy your house any more. I know we agreed a price, but the best I can do now - if I transfer the money today - is 4 Francs" (or whatever your savings are currently worth).
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