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Old 02.03.2021, 10:20
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eyebeebe eyebeebe is offline
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Re: Who own the realestate in Switzerland?

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You can run some numbers on your own to get an idea but here is my take.

Let's take a CHF 1m property, which doesn't really buy anything decent in Zurich. 20% deposit (200k), a 15% amortizing mortgage (150k) and a 65% interest only mortgage (650k). I can get financing for 1% with most banks.

Your annual cashflows are: (i) interest of 8k on the 2 mortgages, (ii) home maintenance costs of 1% of the purchase price so 10k, (iii) 1% amortization of the 1st mortgage so 10k. That's total annual cashflows of 28k. Divide that by 12 months and you get 2.3k per month. Most lenders wont allow you to spend more than 1/3rd of pay on housing costs so you need monthly income of 7k.

Now here is the funny part. Apply a 5% interest rate to the above (as per the stress test that banks do) and that monthly number goes up to 5k which means you need a monthly income of 15k to qualify.

When I look at income distributions, I recon that less than 5% of the population would qualify for a mortgage on their own and roughly 20/25% would qualify as a high-earning couple...say a 2-income household where both partners make 8k each per month and have 1/no kids.
As you say, CHF 1m doesn‘t buy much in large parts of Switzerland and particularly not in parts where earning CHF 180k is a relatively common household income.

When we were buying 3 years ago, we considered moving back to Zurich and I remember looking at Europaallee and thinking who the hell a) can afford CHF 2m+ (So by your calculations CHF 360k pa household income) for an apartment and b) is at a life stage where living in a pokey apartment seems like a good idea. And they get more expensive.

Looking on it seems they‘ve all sold though and now it‘s that kind of money to buy in Zurich-West.

I also can‘t quite get my head round who can afford to buy all the CHF 3m to the sky is the limit priced apartments and houses in my neck of the woods.

The only conclusion I‘ve been able to come to is it‘s people who have ridden the property wave over the last 20 years and are using the bank of mum and dad, but generally the Swiss don‘t seem to move very often.
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