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Old 20.03.2011, 12:25
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Buying or Renting in Switzerland

http://www.swissinfo.ch/eng/swiss_ne...l?cid=29675216

We’re heading towards a wall,” Credit Suisse real estate analyst Fredy Hasenmaile told swissinfo.ch. “There will be no impact this year, but that wall is only two to three years away.”

Interesting Article, prices for Apartments or Houses in Zurich are getting higher. A lot of it has to do with Mortgages being available at rates of 1-2.5%.

Although the Swiss do have some good restrictions on who can have loans (i.e. Income Criterea etc), the availabilty of low interest loans is behind why Apartments and House prices seem to be continually growing.

Its difficult to justify paying 2M for some 3 bedroom "Goldfish Bowl" near lake Zurich.

An increase in Interest rates of just 1-2% will result in people doubling their Mortgage repayments, resulting in a selling spree...


Prices for Property in Zurich are a bubble waiting to burst IMHO.
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Old 20.03.2011, 17:33
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Re: Buying or Renting in Switzerland

Well, if you get your mortgage for ten years, then the larger part of it will be at 3%. People buying these overpriced things in Seefeld really need to do their math with a 5% interest rate because that's where it might end up again. Bubble, yes, in some places, everywhere - no.
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Old 20.03.2011, 17:45
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Re: Buying or Renting in Switzerland

High demand and a low supply will always keep prices high in Zurich.
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Old 20.03.2011, 17:48
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Re: Buying or Renting in Switzerland

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High demand and a low supply will always keep prices high in Zurich.
True, but i guess you could also say the same for Australia...( i have some property there) but prices have dropped in the last year.
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Old 20.03.2011, 18:16
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Re: Buying or Renting in Switzerland

Prices have dropped last year in Australia? Maybe outside the big cities but prices remain pretty high in Melbourne, for example. Growth is at about 5 % per year minimum in Melbourne and still growing, despite the 7 - 8 % interest rates.

Considering interest rates are so low we are probably lucky growth in property is not so high in Zurich.
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Old 21.03.2011, 10:16
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Re: Buying or Renting in Switzerland

Most of the people I know who own their own homes are just looking at the monthly cost of mortgage payments. When I ask them why they bought a home the most common answer I hear is "because it's the same monthly cost as renting", and say they have no interest in actually ever repaying the mortgage, probably because of "eigenmietwert" (higher taxes on property that's paid off).

If interest rates rise, and the cost of home ownership will become 20,30 or 40% higher compared to renting a similar sized flat, alot of people will bail out on their mortgaged homes and go back to renting. In other countries owning your own home is important psychologically, to have your own 4 walls, but here in Switzerland, people don't seem to differentiate much between owning and renting. They are just concerned with the monthly bill.

For the people who do decide to bail on mortgaged homes, I imagine they will take a hard hit, because of the slow housing market here. As it is now, with interest rates low and ownership attractive, it can still take months, years, etc. to sell something. If the situation becomes "unattractive" to buy, I can't imagine how long it will take to sell
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Old 21.03.2011, 10:23
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Re: Buying or Renting in Switzerland

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http://www.swissinfo.ch/eng/swiss_ne...l?cid=29675216

We’re heading towards a wall,” Credit Suisse real estate analyst Fredy Hasenmaile told swissinfo.ch. “There will be no impact this year, but that wall is only two to three years away.”

Interesting Article, prices for Apartments or Houses in Zurich are getting higher. A lot of it has to do with Mortgages being available at rates of 1-2.5%.

Although the Swiss do have some good restrictions on who can have loans (i.e. Income Criterea etc), the availabilty of low interest loans is behind why Apartments and House prices seem to be continually growing.

Its difficult to justify paying 2M for some 3 bedroom "Goldfish Bowl" near lake Zurich.

An increase in Interest rates of just 1-2% will result in people doubling their Mortgage repayments, resulting in a selling spree...


Prices for Property in Zurich are a bubble waiting to burst IMHO.
I believe this is similar to what happened in the 80s in Switzerland. I am waiting for the bubble to burst to buy my place on the lake

Seriously speaking I also do believe its a question of time. 15.000 CHF per square meter is nonsense!
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Old 21.03.2011, 10:53
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Re: Buying or Renting in Switzerland

I've been sitting on the fence, as properties in the areas I'm looking in are going for craaaaaazy prices. I've been on the wrong side of a real estate bubble, and don't want to do that again.

Around here, anything under 1.5 mio is a wreck, needing at least another 500,000 plus (often very much plus) to make it liveable - and that's if you can get permits to renovate.

(Saw a farmhouse recently. 'Suggested' price was reasonably at 1.2. But, it needed almost another million to renovate, strict rules about what could be done, - no facade or floor changes, the barn had to remain in agricultural use - no usable ground around it to speak of, rights of way taking up most of the property. It will be sold closed bid, and we were told that any offer under 5 million would be laughable. Needless to say, we won't be bidding. )

What I don't understand:

Remember the tax reform initiative last November, seeking to require a minimum tax rate for incomes over 250,000? It was argued that the initiative would only affect 1-2% of the population.

So if only 1-2% of the population have incomes over 250,000 - who exactly is buying at these crazy prices? Heck, at 250,000, one would be hard pressed to buy at 2 mio, which is what a 'normal' single family home is going for these days.

Unless of course A.) people are buying way beyond their means, or B.) there are a whoooooole lotta folks who are playing games with their tax returns and the number of high income folks is much greater than the proponents of the initiative estimated. If the former, then we are likely looking at a bubble... and bubbles burst, even in Switzerland. (If the latter, shame on the folks playing games, and the system that allows it.)

I need to get out of my current home - we can't live like this much longer. I guess the thing to do is sell now while the market is hot, go back to the US and cool my heels for a while, then come back and buy again once the bubble bursts.

(Easier said than done, though .)

Last edited by meloncollie; 21.03.2011 at 11:30.
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Old 21.03.2011, 11:16
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Re: Buying or Renting in Switzerland

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So if only 1-2% of the population have incomes over 250,000 - who exactly is buying at these crazy prices?
I guess the people with cash to spare, who are not covered with the income statistics. I've read about several villas on the golden coast that were purchased by rich Russians. Such people have a negotiated tax affairs and are not within any salary brackets.
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Old 21.03.2011, 11:37
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Re: Buying or Renting in Switzerland

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Such people have a negotiated tax affairs and are not within any salary brackets.
Not in Kanton Zurich they won't have done. That no longer exists in Kanton Zurich.

Look at it this way, those paying 5m for a house on the goldcoast will be putting down most of that in cash. Buying property is typicaly a long term hedge against inflation.
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Old 21.03.2011, 11:42
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Re: Buying or Renting in Switzerland

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Most of the people I know who own their own homes are just looking at the monthly cost of mortgage payments. When I ask them why they bought a home the most common answer I hear is "because it's the same monthly cost as renting", and say they have no interest in actually ever repaying the mortgage, probably because of "eigenmietwert" (higher taxes on property that's paid off).

If interest rates rise, and the cost of home ownership will become 20,30 or 40% higher compared to renting a similar sized flat, alot of people will bail out on their mortgaged homes and go back to renting. In other countries owning your own home is important psychologically, to have your own 4 walls, but here in Switzerland, people don't seem to differentiate much between owning and renting. They are just concerned with the monthly bill.

For the people who do decide to bail on mortgaged homes, I imagine they will take a hard hit, because of the slow housing market here. As it is now, with interest rates low and ownership attractive, it can still take months, years, etc. to sell something. If the situation becomes "unattractive" to buy, I can't imagine how long it will take to sell
My mortgage cost is about 30% of what similar apartments are renting for. So mortgage rates would need to triple to match the rent, and maybe quintuple if to force me to bail. And if everyone is bailing, wouldn't rent also rise? When I was renting, the owners raised the rent when interest rates went up but hardly reduced it when it went down.

However, I did buy in 2002. If I was buying now... then you are right - renting would probably be the better option.
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Old 21.03.2011, 14:35
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Re: Buying or Renting in Switzerland

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My mortgage cost is about 30% of what similar apartments are renting for. So mortgage rates would need to triple to match the rent, and maybe quintuple if to force me to bail. And if everyone is bailing, wouldn't rent also rise? When I was renting, the owners raised the rent when interest rates went up but hardly reduced it when it went down.

However, I did buy in 2002. If I was buying now... then you are right - renting would probably be the better option.
Yea, I think people like you who bought a long time ago, or have low monthly payments for whatever reason (maybe had a lot of cash an put more than 50% downpayment or whatever), then a rise in interest rates won't affect them much.

But a rise in interest rates will affect a large amout of people, who bought recently, or are just barely making their current mortgage payments. That's pretty much how the bubble happened in the US. Long-time home-owners and high-end property in good locations wasn't affected too much.
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Old 21.03.2011, 16:02
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Re: Buying or Renting in Switzerland

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My mortgage cost is about 30% of what similar apartments are renting for. So mortgage rates would need to triple to match the rent, and maybe quintuple if to force me to bail. And if everyone is bailing, wouldn't rent also rise? When I was renting, the owners raised the rent when interest rates went up but hardly reduced it when it went down.

However, I did buy in 2002. If I was buying now... then you are right - renting would probably be the better option.
I cry my eyes out every month when I see how much we pay for rent - but buying a house in the -wil area is incredibly overpriced. AND I am not willing to pay 2mios for just an appartment, not even a house with a back yard or anything.
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