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  #61  
Old 23.09.2022, 22:44
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Re: Ready for higher interest rates?

Buffet said there’s only three ways that a smart person can go broke…liquor, ladies, and leverage.

Demand outstrips supply they say so prices will stay high or grow forever. I remember very well the boom and bust from 2004-2007 in eastern Europe. There was a bidding war on every property. And when the market crashed in 2007 and i put the flat for sale i got one phone call the entire year.
It is all good until it isn't. Once people realize the prices for real estate start to go down it is all over. If you are leveraged to the max without cash reserves the last thing you want in to have to sell in such a market.

Last edited by Bibicu; 24.09.2022 at 00:31.
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  #62  
Old 24.09.2022, 21:58
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Re: Ready for higher interest rates?

According to this article, house prices have started to fall.

https://www.globalpropertyguide.com/...s-to-slow-4368

Is it all over?
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  #63  
Old 24.09.2022, 23:41
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Re: Ready for higher interest rates?

If it is true that the prices started to fall than banks will value the houses lower than the asking price. The more the price falls the bigger the gap between what the seller wants and what the bank says it is worth.

So over time less and less people will qualify for a loan.


Real estate market is a local market. Demand in Zurich is different than demand in Aargau.

Is it all over? I guess in Zurich area the party is still on but maybe in Olten or somewhere in the mountains there are already the first signs of cooling.
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  #64  
Old 26.09.2022, 09:28
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Re: Ready for higher interest rates?

The stats are from the SNB. I looked through the numbers. While it is true that average prices fell, it varies greatly by region, and property type. Family houses in lake geneva region were up by 4% for example.

Given the rapid rise over the last decade or so, I would consider a small decline a sideways movement... hopefully any decrease will stay muted like this.
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  #65  
Old 26.09.2022, 10:20
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Re: Ready for higher interest rates?

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The absolute winners are people locked in mortgages at below inflation, as they're currently borrowing in negative real rates.

These are the real winners.
1.15% fixed until 2030.
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  #66  
Old 26.09.2022, 10:26
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Re: Ready for higher interest rates?

Well, it looks like we have made a successful bid on a house near Zürich, and will be signing the purchase contract shortly. (I never thought I would go into debt for THIS much money!)

With interest rate outlook quite 50/50, any tips on how to structure the mortgage?
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  #67  
Old 26.09.2022, 10:35
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Re: Ready for higher interest rates?

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Well, it looks like we have made a successful bid on a house near Zürich, and will be signing the purchase contract shortly. (I never thought I would go into debt for THIS much money!)

With interest rate outlook quite 50/50, any tips on how to structure the mortgage?
Congratulations! Personally with interest rates still relatively low, I'd go for certainty and have a single tranche with a long term fix. You can still get 12 year fix <3%. Sure, I might pay more if interest rates go down, but for the roof over my head, I'd prefer security/predictability.
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  #68  
Old 06.10.2022, 14:11
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Re: Ready for higher interest rates?

Already a joke, but will it happen?

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  #69  
Old 06.10.2022, 14:19
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Re: Ready for higher interest rates?

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If it is true that the prices started to fall than banks will value the houses lower than the asking price. The more the price falls the bigger the gap between what the seller wants and what the bank says it is worth.

So over time less and less people will qualify for a loan.


Real estate market is a local market. Demand in Zurich is different than demand in Aargau.

Is it all over? I guess in Zurich area the party is still on but maybe in Olten or somewhere in the mountains there are already the first signs of cooling.
It's not over and as you say the real estate market is local. There are bidding "wars" for most desirable properties in canton ZH like there's no tomorrow. Swiss and expats alike compete against each other for properties that were bought, for instance, for 1.6 million in 2016 and are sold for 2.1 in 2022.
No improvements, no big investments in those houses, the inflation doesn't justify such an increase, it's just extremely speculative behaviour because people are afraid of inflation and higher estimated interest rates.
Banks too contribute to this madness, some are going with absurd prices, it's only a few that try to stop their clients to make some idiotic move. You could literally buy a mansion with the assorted land with own orchard and winery and goodness knows what else in other countries for the price of some mediocre apartment here. But hey ho.
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Old 06.10.2022, 16:13
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Re: Ready for higher interest rates?

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It's not over and as you say the real estate market is local. There are bidding "wars" for most desirable properties in canton ZH like there's no tomorrow. Swiss and expats alike compete against each other for properties that were bought, for instance, for 1.6 million in 2016 and are sold for 2.1 in 2022.
No improvements, no big investments in those houses, the inflation doesn't justify such an increase, it's just extremely speculative behaviour because people are afraid of inflation and higher estimated interest rates.
Banks too contribute to this madness, some are going with absurd prices, it's only a few that try to stop their clients to make some idiotic move. You could literally buy a mansion with the assorted land with own orchard and winery and goodness knows what else in other countries for the price of some mediocre apartment here. But hey ho.
But the upkeep of such an estate is not to be underestimated.
;-)

While it's nice to have a garden, having to take care of it is not everybody's cup of tea....
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  #71  
Old 06.10.2022, 18:27
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Re: Ready for higher interest rates?

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But the upkeep of such an estate is not to be underestimated.
;-)

While it's nice to have a garden, having to take care of it is not everybody's cup of tea....
I agree. In fact some people are "anti-talent" so to speak but that's a different discussion.
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