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  #21  
Old 20.08.2011, 09:10
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Re: Experts predict the housing bubble is about to burst

It is rather curious, though, that even the apartments are rentals and it's not uncommon to have neighbors who have lived in the same flat, renting, for 20+ years. Was the price of real estate always this expensive? It just seems that if it were more of a tradition to own a place, apartment or house, there'd be a lot more mechanisms in place to help people buy their own place. In Helsinki, the prices of homes is really very high in comparison to salaries and the taxes, but people do it as there's a much, much smaller rental market than here where almost everything is a rental.
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Old 20.08.2011, 09:27
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Re: Experts predict the housing bubble is about to burst

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Not anymore, my friend. The Swiss have seen it's much cheaper to buy a house / flat in the longterm. Most Swiss I know have bought their own property or are renting because they are in a cheap apartment and/or are looking for a place to buy. The way of the world.
However in CH they never really do buy a house as it's usual to retain a 65% mortgage forever. It's just a form of renting, in many case parents die & their children cant afford the mortage on the house. It's all very different to 'owning' in the UK or USl
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  #23  
Old 20.08.2011, 09:30
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Re: Experts predict the housing bubble is about to burst

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It is rather curious, though, that even the apartments are rentals and it's not uncommon to have neighbors who have lived in the same flat, renting, for 20+ years. Was the price of real estate always this expensive? It just seems that if it were more of a tradition to own a place, apartment or house, there'd be a lot more mechanisms in place to help people buy their own place. In Helsinki, the prices of homes is really very high in comparison to salaries and the taxes, but people do it as there's a much, much smaller rental market than here where almost everything is a rental.
It's very easy to buy here if people actually wanted to, the 20% deposit can be a pension fund. The Swiss are risk averse thats all & don't want to bet on low interst rates till the day they day. If the price falls expect a cash call from the bank.
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Old 20.08.2011, 09:51
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Re: Experts predict the housing bubble is about to burst

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However in CH they never really do buy a house as it's usual to retain a 65% mortgage forever. It's just a form of renting, in many case parents die & their children cant afford the mortage on the house. It's all very different to 'owning' in the UK or USl
If they were to take away asset taxes, claiming interest deductions/deemed rental income on your main residence as well as a big increase in interest rates here, then i'm sure people would be more willing put more money in. There's no advantage in paying more into a mortgage when that money makes a better return in a savings account.

There is certainly a building boom in Zug. I count at least 15 cranes we can see and i've been waiting a year for work to be done as my planner is too busy.

Housing bubble about to burst? Well there are still too many people willing to pay silly prices now that interest rates are low. In 5/10 years time when those low fixed rate deals expire and there are much higher interest rates - that's when things went wrong in the UK.

Last edited by CH_Me; 20.08.2011 at 10:05.
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  #25  
Old 20.08.2011, 10:08
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Re: Experts predict the housing bubble is about to burst

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- that's when things went wrong in the UK.
I think self cert loans were the issue, more than 50% of all mortgates taken out 4 years ago were self cert or lia loans.

When I bought my first property max loan was 3 times salary, allow people to borrow 6 times salary & prices will double.
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  #26  
Old 20.08.2011, 11:12
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Re: Experts predict the housing bubble is about to burst

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There is certainly a building boom in Zug. I count at least 15 cranes we can see and i've been waiting a year for work to be done as my planner is too busy.

.
That is telling you the market likes & will pay a premium for new build properties, Second hand houses just sit on the market for many years unless the owner will take a lower offer, usually they dont & the property never sells.
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  #27  
Old 20.08.2011, 11:56
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Re: Experts predict the housing bubble is about to burst

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If you look at CH house prices in USD or GBP terms it's a bubble waiting to burst.
You also need to compare the price of lending money, i.e. the interest rates for long-term mortgages. That is what has (at least in the past) sustained higher residential property prices in CH.
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Old 20.08.2011, 12:08
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Re: Experts predict the housing bubble is about to burst

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However in CH they never really do buy a house as it's usual to retain a 65% mortgage forever. It's just a form of renting, in many case parents die & their children cant afford the mortage on the house. It's all very different to 'owning' in the UK or USl
This practice was, I believe, the original meaning of the word "mortgage", i.e. paying a sum of money to someone who only then becomes the owner when the occupiers die [mort = death]. As long as they live the occupiers retain all the rights of ownership.
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  #29  
Old 20.08.2011, 12:19
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Re: Experts predict the housing bubble is about to burst

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The first part of what you state is just not true. Depending on whom I speak to (Swiss persons) some will say, we all want to buy our house, others not.

Many Swiss people cannot afford to buy a house - unsuprisingly, just like the many "rich" expats who can't either.

The second part of your statement, however, highlights the key difference - the motivation to buy houses is different. Most UK homeowners do so to make a profit with an eye on resale value. In CH, housebuying - unless you are a company - is an individual non-monetary investment for the long-term future. All IMO of course
while there is certainly an element of housing speculation in the UK (esp. in the last few years) i think most brits would find it strange to rent a house for 20 years if they had the choice of buying. in the UK we have very weak tenants rights and this supports the 'need' to own your own house.

i feel this even though i am in switzerland and know i have stronger rights. i'm just too used to the feeling to want to live in rented accommodation.

personally, i think that massive global liquidity and the wall of cash flooding switzerland will pump up a housing bubble in switzerland. i don't think there needs to be speculative behavior desires for this. i also don't think the tax on gains will deter this movement. people will simply look at the cost to rent versus the cost of mortgage and choose to buy.

imo, sustained low IRs always lead to asset bubbles.
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  #30  
Old 20.08.2011, 12:28
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Re: Experts predict the housing bubble is about to burst

As far as I can make out, the majority of Swiss real estate is passed on through inheritance, is traded between family, friends and acquaintances and never comes on the open market, so what you are discussing is superficial and of limited significance.
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  #31  
Old 20.08.2011, 12:49
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Re: Experts predict the housing bubble is about to burst

The advantage as I see it (as a 67 yr. old) is that if you don't pay the full price of the property you have that money in your pocket (as long as the interest payments are small). Also when one finally makes the last voyage into the unknown (dies) you can't take your house with you but if you had had the money you could have spend it.
There is also the risk (that older folks perceive) that if you can't work anymore, you can't earn anymore. Therefore if the future holds unkown uncertainties it is better to have some cash in hand to help you survive if the old age pension is slowly inflated away into nothing.
This is one of the reasons I retain about a 45% Hypothek (mortgage) on my property. The other is tax and also that I like the sound gold makes when it clunks down on the table.
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Old 20.08.2011, 12:51
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Re: Experts predict the housing bubble is about to burst

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As far as I can make out, the majority of Swiss real estate is passed on through inheritance, is traded between family, friends and acquaintances and never comes on the open market, so what you are discussing is superficial and of limited significance.
i would have guessed that newly built housing would be the majority of transactions. i bought mine from the estate of a a guy who left it to his 3 children.
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  #33  
Old 20.08.2011, 12:59
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Re: Experts predict the housing bubble is about to burst

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That is telling you the market likes & will pay a premium for new build properties, Second hand houses just sit on the market for many years unless the owner will take a lower offer, usually they dont & the property never sells.
I think it is more a case of developers being greedy. At one site they are re-developing existing family apartments to be tiny luxury ones.
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Old 20.08.2011, 13:12
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Re: Experts predict the housing bubble is about to burst

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i would have guessed that newly built housing would be the majority of transactions. i bought mine from the estate of a a guy who left it to his 3 children.
...however Swiss buyers will have priority. Selling to foreigners is just short of being a traitor. The Swiss have an anathema of being directly or indirectly bought up by, above all, the Germans. Part of it is maintaining stability, part of it is history and tradition. Naturally greed and other pressures are loosening the grip, but the Swiss have great resistance to being caught in the tides and storms of other lands.
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  #35  
Old 20.08.2011, 16:57
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Re: Experts predict the housing bubble is about to burst

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Thatis telling you the market likes & will pay a premium for new build properties, Second hand houses just sit on the market for many years unless the owner will take a lower offer, usually they dont & the property never sells.

Second hand houses sell just as well as new builds. In fact in some places they are priced almost exactly the same per m2 (or m3).

The ones that stay on the market are the ones that are falling apart and their owners are being unrealistic about the value of the house or the cost of the renovations that are needed or the ones that are zoned for agriculture only. And there aren't so many of those. Not in Romandie anyway.
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Old 20.08.2011, 17:01
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Re: Experts predict the housing bubble is about to burst

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Second hand houses sell just as well as new builds. In fact in some places they are priced almost exactly the same per m2 (or m3).
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They are priced the same & don't sell, I was looking for 4 years, most of the houses I saw at the beginning were still for sale after 4 years.
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  #37  
Old 20.08.2011, 17:03
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Re: Experts predict the housing bubble is about to burst

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I think it is more a case of developers being greedy. At one site they are re-developing existing family apartments to be tiny luxury ones.
Most of the new build in Verbier are where the old buildings are being replaced with new bigger ones, the land is the main value so knocking down a 45 year old house makes sense.
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Old 20.08.2011, 17:16
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Re: Experts predict the housing bubble is about to burst

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They are priced the same & don't sell, I was looking for 4 years, most of the houses I saw at the beginning were still for sale after 4 years.
Maybe for vacation homes in Verbier and the like. That's a different market.
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Old 20.08.2011, 17:21
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Re: Experts predict the housing bubble is about to burst

My understanding of a 'housing bubble' is that prices go through the roof.

Swiss property prices have shown only modest growth in the long term, that is 4-8% a year in sought-after areas. And no growth in places that do do not have fast and easy connections to Zurich or Geneva. I saw 25% increase in 10 years when we sold up in Thalwil (8 minutes by train to Zurich).

I can only compare this to the UK where it has been bubble and bust for 40 years. I can remember when the first terraced house in North London sold for over £10,000. This made headlines. Today, even with the current drop in house prices, properties in the UK that were bought for £25,000 in 1970 are selling for £2.5 million. When house prices double in 5 years - that's a bubble!

Where things may come unstuck in Switzerland is not in a price bubble, but a construction bubble. You only need to look at the number of cranes to see the furious spate of building that is going on. A hike in interest rates, or drop in the number of people coming over here to work, could stifle demand and result in a 'housing construction bubble'...
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Old 20.08.2011, 20:46
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Re: Experts predict the housing bubble is about to burst

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My understanding of a 'housing bubble' is that prices go through the roof.

Swiss property prices have shown only modest growth in the long term, that is 4-8% a year in sought-after areas. And no growth in places that do do not have fast and easy connections to Zurich or Geneva. I saw 25% increase in 10 years when we sold up in Thalwil (8 minutes by train to Zurich).

I can only compare this to the UK where it has been bubble and bust for 40 years. I can remember when the first terraced house in North London sold for over £10,000. This made headlines. Today, even with the current drop in house prices, properties in the UK that were bought for £25,000 in 1970 are selling for £2.5 million. When house prices double in 5 years - that's a bubble!

Where things may come unstuck in Switzerland is not in a price bubble, but a construction bubble. You only need to look at the number of cranes to see the furious spate of building that is going on. A hike in interest rates, or drop in the number of people coming over here to work, could stifle demand and result in a 'housing construction bubble'...
A friend of ours works for a reputable, international real estate company. She recently evaluated an apartment (120 Sq mtrs), in a newly constructed complex (2009) close to the Nyon area. Based on the current market price, the increase was 33% in just about 2 years. Would you call this a bubble or is it that the prices in canton Vaud are increasing rapidly?
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