You made the right decision. If the house does not feel right, then you should not buy. It is probably the biggest financial decision people make, which, at least to me, means that it should not be taken without careful and cool-headed reflection.

I could never understand how people can decide to buy a house within 5 minutes. If the market is really that hot that people fight for houses like they fight for clothes on knock-down sales, then it may not be the right time to buy at all.

I wonder if putting all your money, including pension, in the 20% deposit is a decision anyone can take lightly.

Hopping on to (hijacking sorry) this thread - do you know of any site or forum giving an indication of how long the ads have been posted on homegate, etc. and showing any 'natural' price decrease over time ? I had seen this tracked on some sites in France or in the UK and feel this is useful information when negotiating.

I agree if it does not feel right then walk away. Problem with Zurich, Geneva and Lausane is there is too much competition for so little choice.

630K for 87 m2 apt, 35 m2 terrace and a 30k garage incl. is not exactly cheap...
Considering 2 m2 of terrace surface as 1 m2 of normal surface, you would have 105 m2 for 600k, meaning 5'715 CHF/m2.
You can certainly build well for that amount. Part of the price is probably 'justified' by the view or by situational aspects.
But then, my standards are more for the Fribourg region, which is cheaper.

To OP,

hope my case is relatively relevant to you in terms of timing and location...

We had been looking for appartment purchase since Feb this year and signed the purchase contract in sep this year for an appartment in Pully, so same canton as Lausanne.

First of all, I think 6000sfr/sq m is not too surprising in this area but I agree with some members about getting bank's evaluation on that. I don't think it's really a bias if the bank you talk to finance the appartment. In contrary, if the bank is a big one, this should give you some confidence of buying as far as I know, they have a standard model to evaluate it.

Instead of just looking at the list price, there're 2 other costs you should take into account seriously
1. Notaire fee. I guess the bank already told you that it's 5% of listing price. However, the % actually varies depending on the stage of construction. If it is a land when you purchase, you actually paid 5% of the LAND PRICE which could be like 20% of the list price only so your saving could be far much more than the amount you would like to negotiate from the list price

2. 'Plus and moin value' --this is the additional cost you might need to put. I talked to friends who own appartment and am told that it could be around at least 10% to xxx depending how well is the appartment being designed like kitchen budget, toilet budget, use of material. Eg. adding a socket just cost us 180sfr !!!!

If you would like to know more, you could PM me.

by the way, 30K for carpark is pretty reasonable. the range is actually 30-40K for interior one

Regards

Thanks for this detailed reply.
After we rejected the offer, we continued research for a place and we found that none of those places fit into our criteria
- Good transport
- School
- Shops
- Time to travel to get to work

We went back and visited the area, discussed with other people, took inputs from all of you into account. Verified that the actual price per m2 for apartments in Lausanne vary from 5500 to 6000 CHF/m2.

Taking all this into account, we decided to contact the builder again. Of course the apartment we wanted was gone, but we had exactly the same layout apartment 1 floor down, for 10K less price. We went ahead and reserved it. The contract signing is in process.

For the plus-minus that you mentioned above, we made sure that we will have at least 2 meetings with the architect to cover such aspects as location of sockets, etc. So now it is time to save more than ever during the next year, so that when the apartment is constructed and ready, we have some money to move

Thanks again to everyone for your great comments.

muffin, I might just PM you to find out more about your experience.


Cheers.

If you go to comparis.ch its states when the add was published

muffin, there is a couple of top tips there, excellent. This shows just how first class this forum can be with people sharing their experiences.

With so few properties on the market, you could be looking forever to find the perfect place at the perfect price. Sometimes this never happens and you have to just go for it. We just compared the amount we were paying on rent to the amount we will pay in interest plus expected repairs (1% a year) and extra taxes. Now is a good time to lock into a low interest rate.

We bought in 2005 and I still haven't seen anything better - but i'm still looking Since then our household has doubled and my other half no longer commutes. A place in the middle of nowhere now seems appealing!

I agree with this, it is difficult to find a dream house anywhere, let alone in this market. Now as to renting vs ownership, perhaps this might be a good time to buy in many parts of Switzerland because interest rates are extremely low and prices have been more or less reasonable and stable.

Lac Leman is one exception. What some housing 'experts' advise is to profit from low interest rates then give an example that rent a 3-bedroom flat in Geneva it would be between 3,500 and 4,000 CHF per month and if you buy the same flat for 800,000 CHF it would cost you significantly less in mortgage repayments. What they conveniently omit is that you can not possibly find such a flat at that price in Geneva. If you go on Homegate or Immostreet, it is more likely that the asking price would be 1.6 million.

There is an interesting article on this in Tribune de Genève. The market is seriously overheated around here: http://www.tdg.ch/geneve/actu/surcha...ose-2009-11-13

A libor mortgage for 1.3m at .9% is only CHF 1000 a month I read in the local paper that landlords charge up to 40% more than they pay in mortgage costs. They justify this through repairs and maintenance, but from what i've heard, many tenants end up paying some of these costs too. I couldn't afford to rent the house I live in!

We went for a 2 yr fixed at 1.35% I think it was (docs at home). Our interest and amortisation payments together are less than half the rent we were paying in a 10 sqm less appt. However, we do have to top up our pensions and pay PPE charges, but we're still 300.- or so better off a month.

It is not interest rates but income that should guide people on how much debt they can take.

I agree that no one should take on a mortgage that they can't afford to make the payments for (for at least 6 months - year if not longer) should they lose their income or interest rates increase.

Interest rates are the way to compare your cost of borrowing with the cost of renting. With your figures for 4k a month rental vs 1.6m purchase price (1.3m mortgage), a 4% interest rate will make the mortgage more expensive than renting. However, rents can be increased when interest rates increase too.

If you use any mortgage calculator you end up with considerably more than 4,000 CHF per month even at lowest official interest rates. At 4% it is close to 6,000 CHF per month.

Whatever the interest rates, 1.3 million of debt is seriously scary. I am sure that I could go to a bank and get this mortgage approved, I just do not see the point of squandering all our savings, my husband's pension and a good night's sleep on a tiny terraced house.

A good old rule in personal finance says that a cost of your roof shouldn't be more than a third of your income.

We shouldn't forget what happened in the US recently when people bought houses they couldn't afford

About negotiating prices, I think it is highly dependant on the object, location, market and the building company.
I would always give it a try only if - as some EF'ers said - one is ready for loosing too.

I used a calculator. 4% x 1.3m = 52000/12 = around 4,333 a month.

Any amount of debt is scary if you can't make repayments should something go wrong or your life circumstances change.

I agree - I would never put all my savings and my pension into a deposit.

I also agree that the market in the Lac Leman area is seriously overheated at the moment. There's an interesting report from Credit Suisse where they say the Suisse market is looking stable, apart from in the Zurich and Lac Leman areas (from memory) where they are expecting falls - a few ski areas too I think. Its here:

https://marketdataresearch.credit-su...omy.RealEstate

We were talking about two different things -- this is interest only. The actual cost of ownership is considerably higher than this when you add charges and amortisation and what not.

I am actually not against home ownership, to the contrary, it just seems that in Geneva it financially (and hedonistically) does not make much sense, at least not at the moment and certainly not for medium-income families.

When looking at whether it was better to rent of buy we compared the cost of renting vs the interest costs. Repayments/amortisation is you repaying part of the loan, so this shouldn't be added in the comparison.

Yes - there are maintenance costs. 1% of the purchase price per year is what the mortgage calculators budget for. Kanton Zug gives a generous flat rate deduction for maintenance whether you spend the money or not.