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Old 31.05.2011, 22:54
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Why Swiss Prefer to Rent an Apartment than Buy a House?

Correct me if I'm wrong I discovered that majority of Swiss people dont opt to buy a house but prefer to live in rented apartments for whatever the number of years it takes. After doing my simple arithmetics, comparing and contrasting the prices of different houses to the amount one pays for renting an apartment, I can see that in less than 15 years the one who is renting could have used the same amount to buying a decent house. Could there be any reason(s) for preferring to rent than possessing a house of their own? I beg to argue that it depends on which canton or town one prefers to live for life since I learnt that many Swiss, for one reason or another, would prefer to live in one area for a 'longer' time.

Also observed is the fact that many foreigners who reside indefinitely in Switzerland prefer to buy a house. True?

Cheers,
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Old 31.05.2011, 22:57
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

renting vs buying - what would you do?

Buying or Renting in Switzerland

Costs of Buying vs Renting in Zurich

There are more of such threads.
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Old 31.05.2011, 23:00
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

Thanks I didnt see that.

Cheers, copfum
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Old 31.05.2011, 23:00
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

Are you saying that one can buy a house with the equivalent of 15 years rent? I think in many cases 15 years rent might equal the 20% down payment needed to get a loan, but figuring 2K rent per month, that comes to 360K, and houses for that price are only found in fairly remote places- even then they are usually in need of a total overhaul ($$$).

There just isn't enough space for everyone to live in a house. And even buying an apartment- the 20% down payment is the killer. For a 360K apartment, which wouldn't get you much in Zurich, you gotta have 72K in cash if you want to buy. The average Joe just doesn't have that kind of dough.
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Old 31.05.2011, 23:08
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

I think the same reason people here don't have cars and are absolutely ok with fab public transport (upkeep of car is expensive, the additional costs are what often makes it not affordable), people prefer to have an apartment and travel instead. To have the cash for a house here is insane, all locals that have bought anything did it with a help of families, not one family, but both of them. Upkeep of a house here is very expensive, too, and one always has to invest into a house. There are affordable houses I have seen and not bad at all, very nice in calm, quiet places, but then one is hours away from any decent work and day care, social life, etc. There are apartments in large cities that cost 5x the price of a decent house in the country. But one has to have that desire to actually live far away. So those who want to live closer to jobs and city life, do not usually opt for a house, as there is a shortage and prices higher, but chose an apartment, with a backyard, etc. The apartment buildings are very nice themselves, often large villas, anyways, with gardens, large terraces, so it is not a bad choice at all.
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Old 31.05.2011, 23:11
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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. After doing my simple arithmetics, comparing and contrasting the prices of different houses to the amount one pays for renting an apartment, I can see that in less than 15 years the one who is renting could have used the same amount to buying a decent house.

In Switzerland the arithmetics are not so simple.
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Old 31.05.2011, 23:52
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

I can't imagine that 15 years of rent would buy me a place that would be even remotely as practical or well located as the place I currently rent. And then of course as long as I rent I don't need to bother with maintenance or major repairs. I let the landlord worry about that. I actually considered buying at one point and had the bank talk me through the arithmetic and basically the gist of what I understood was that I should sell all my (highly profitable) investments, empty my bank account to the last rappen, hand over all my savings and they would give me a massive debt in return and press the yoke of a massive mortgage on me for the next couple of decades. My idea of freedom is a bit different.
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Old 01.06.2011, 00:06
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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I think the same reason people here don't have cars
People here don't have cars?

They have more than one for every two people!

In our household of three drivers, we have four cars (one currently not functioning), seven motorcycles (one currently not functioning), and a moped.

Heck, the second vehicle is FREE for taxes and insurance, how more car-friendly can you get?

Now, back to houses, I have never been interested in owning, either back when I lived in the US, nor in the 25 years I've lived here, I've got better things to do with my free time, though it was fun building a house with my father when I was 16 (which is probably why I don't want to own one).

Tom
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Old 01.06.2011, 00:09
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

15 years of, say, 2500 a month rent...let's look at it.........

30 grand a year with nothing to show (x 15 years = 450'000)
No tax deduction for interest and maintenance

And if you look in certain areas, you double your money on the asset in 5-10 years. Don't believe me? Price up a "loft" in something like Puls 5 - when they were selling, the were 8-900k and with the development in that area, they have doubled. Build year 2005 IIRC?

I would be happy as an asset owner (or pension fund) to have a yield of around 5% per unit on my apartment building per annum.....
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Old 01.06.2011, 00:34
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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In Switzerland the arithmetics are not so simple.
You maybe right Terco. Arithmetics might not be always easy here. I see it when I go hiking, I always seem to be faster than the time indicated per any given hiking distance though I will be walking at a donkey's pace.

Back to the house issue: Sure I agree that house maintenance is very expensive here. Actually I know it from experience since I own a house. Thought there could be other more specific answers to explain my curiosity as to why then majority foreigners opt to buy such expensive to maintain houses whereas the majority locals repel the same idea. Thanks for all of you for giving me your experience and opinion to my still standing question.

Thanks, Copfum
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Old 01.06.2011, 01:10
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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Back to the house issue: Sure I agree that house maintenance is very expensive here. Actually I know it from experience since I own a house. Thought there could be other more specific answers to explain my curiosity as to why then majority foreigners opt to buy such expensive to maintain houses whereas the majority locals repel the same idea. Thanks for all of you for giving me your experience and opinion to my still standing question.
Culture?

In the anglosphere, success revolves around owning a house and owning a car so when we come here we still think and act the same way. In the anglosphere it is quite common for people to spend much of their free time doing DIY and fixing stuff to save costs. Look at other threads on this forum about car maintenance for example. In Switzerland people think, why sacrifice my own free time when I can pay somebody to do it for me? Switzerland doesn't have a DIY culture. It's the same with a house. Why plan and pay for maintenance and negotiate a mortgage with the bank when the landlord can do it better than me and through economies of scale is probably getting the better deal too? With the additional advanatge that as a tenant I can serve my notice, pack my belongings and leave whereas owners have much more hassle when selling.

There is no righ or wrong, it's just a different way of looking at the problem.
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Old 01.06.2011, 01:27
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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In our household of three drivers, we have four cars (one currently not functioning), seven motorcycles (one currently not functioning), and a moped.

Heck, the second vehicle is FREE for taxes and insurance, how more car-friendly can you get?
Yeah, try 4 cars here or in Geneva. Impossible, nowhere to park, and the long term parking fees are incredibly steep.
There is nowhere to park even if you want to shell out those 30fr day parking fee.

In boonies, yes. In cities, more people I know actually don't have one.
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Old 01.06.2011, 01:31
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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Culture?

In the anglosphere, success revolves around owning a house and owning a car so when we come here we still think and act the same way. In the anglosphere it is quite common for people to spend much of their free time doing DIY and fixing stuff to save costs. Look at other threads on this forum about car maintenance for example. In Switzerland people think, why sacrifice my own free time when I can pay somebody to do it for me? Switzerland doesn't have a DIY culture. It's the same with a house. Why plan and pay for maintenance and negotiate a mortgage with the bank when the landlord can do it better than me and through economies of scale is probably getting the better deal too? With the additional advanatge that as a tenant I can serve my notice, pack my belongings and leave whereas owners have much more hassle when selling.

There is no righ or wrong, it's just a different way of looking at the problem.
I totally agree with this post.

Half of the posts on this forum are concerned with issues which have their roots in culture.

First, understand yourself. Which means your culture.

By calling something 'strange' or 'abnormal' we are usually comparing it to the culture in which we were brought up.

Just because the culture in this geographic area does not conform to our idea of "correct", does it make the culture 'strange'. 'difficult to understand' or plain 'wierd'?

No.

The preference for renting is deep-rooted in the Swiss psyche, for various reasons, mostly to do with risk aversion, and what their parents did.

The current interest environment is not typical. Over the last 50 years, global economic circumstances have not aligned to create the conditions that we see in Switzerland today.

So we need some perspective, and to understand why, at today's extremely low interest rates (and high Swiss Franc) it logically makes more sense to buy, but yet the Swiss prefer to rent.
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Old 01.06.2011, 01:32
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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You maybe right Terco. Arithmetics might not be always easy here. I see it when I go hiking, I always seem to be faster than the time indicated per any given hiking distance though I will be walking at a donkey's pace.
I always need twice as much as the signs say, funny isn't it?

I went through the numbers and it just doesn't make sense to me. One of the biggest problems was loosing the opportunity to invest the money needed for the downpayment. You tell me you want to pay a lot of money for the right to owe an awfully bigger lot of money? Instead of taking your buckets of CHF and actually invest them somewhere else?

The other big problem for me would be buying in Geneva when prices here show many signs of bubble behavior.

There are many reasons to buy a house but for me investment is not one of them. On the other hand, if you see that all the numbers point in your favor then just go for it. You might even make a tidy profit if you invest in something nobody else does (and are right).
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Old 01.06.2011, 01:43
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

- Tenants have good protection
- Transaction costs
- Market is illiquid
- People can't afford the deposit (20% required) and property is expensive
- People got burned badly during the last boom when the SNB hiked rates to cool the market
- Property prices have been relatively calm since the bust
- There is an tax on imputed rental on owner occupiers
- Maintenance costs
- Taxes against property speculation
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Old 01.06.2011, 01:57
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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I always need twice as much as the signs say, funny isn't it?

I went through the numbers and it just doesn't make sense to me. One of the biggest problems was loosing the opportunity to invest the money needed for the downpayment. You tell me you want to pay a lot of money for the right to owe an awfully bigger lot of money? Instead of taking your buckets of CHF and actually invest them somewhere else?

The other big problem for me would be buying in Geneva when prices here show many signs of bubble behavior.

There are many reasons to buy a house but for me investment is not one of them. On the other hand, if you see that all the numbers point in your favor then just go for it. You might even make a tidy profit if you invest in something nobody else does (and are right).
I do respect your argument and opinion. Thanks
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Old 01.06.2011, 02:42
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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15 years of, say, 2500 a month rent...let's look at it.........

30 grand a year with nothing to show (x 15 years = 450'000)
No tax deduction for interest and maintenance

And if you look in certain areas, you double your money on the asset in 5-10 years. Don't believe me? Price up a "loft" in something like Puls 5 - when they were selling, the were 8-900k and with the development in that area, they have doubled. Build year 2005 IIRC?

I would be happy as an asset owner (or pension fund) to have a yield of around 5% per unit on my apartment building per annum.....
But where can you buy a place for 450,000 that you would pay 2,500 for in rent? In the sticks maybe, but in the cities property is much more expensive whereas rents are still relatively moderate. Some of the places I looked at in that price tag you couldn't charge much more than 1,300 for in rent.
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Old 01.06.2011, 03:28
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Re: Why Swiss Prefer to Rent an Apartment than Buy a House?

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- Tenants have good protection
- Transaction costs
- Market is illiquid
- People can't afford the deposit (20% required) and property is expensive
- People got burned badly during the last boom when the SNB hiked rates to cool the market
- Property prices have been relatively calm since the bust
- There is an tax on imputed rental on owner occupiers
- Maintenance costs
- Taxes against property speculation
on the other hand, since i'm looking to buy a house:

- you live in a place you own (psychological element)
- cheaper (currently) than rent. though i'm not sure it really is if you factor all costs in
- ties up some cash which you don't have to worry about investing
- motivates you to earn more money to pay off your debts
- gives you more to do so you don't get bored
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