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  #21  
Old 28.11.2011, 12:07
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Re: Housing bubble about to explode in the Arc Lemanique

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The bubble to burst would require that people in Switzerland stop buying houses... Do you really think THAT will happen in Switzerland? Remember people are overpaying for everything here...
You don't really "buy" in CH according to what "normal" Europeans understand by buying. You take a a kind of rent with your bank on which your savings (your 20%) are blocked. People will stop doing that as soon as this rent approaches a normal rent as their 20% can be invested elsewhere.

Anyway, I think I'm gonna stop here.

It's a big investment, a big risk, and a short-term saving (say over 2 years) won't compensate a potential price downturn of even only 20% (don't forget the rates and the refinancing risks). I don't want to stop anybody from taking such a step but people may want to be informed about the present risk of a bubble and the fact that bubbles have gone burst in the past, even in Switzerland, at a time when economy was running alright.
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  #22  
Old 28.11.2011, 12:09
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Re: Housing bubble about to explode in the Arc Lemanique

I guess im more of a glass half full type of guy..

the good properties will always maintain their value.. even in the US where there is lots of choice of land etc
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Old 28.11.2011, 12:25
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Re: Housing bubble about to explode in the Arc Lemanique

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I'm calling the company and taking my 25K CHF deposit back.
GVA, was that 25K a reservation deposit? If so, I hope you don't have trouble getting your money back.

----

I'm confident that I understand the local market (SZ), and I have decided that property here is no longer a good investment, especially for non-EU buyers who have no basic right to live in Switzerland. (Even as a C permit holder I'm getting nervous about permit renewal in this political and economic climate...) Prices are beyond insane, far removed from fundmental value.

Given that the few properties on the market are run-down tiny shoeboxes on a postage-stamp plot of land for 2-5 million... and once you spend your 2-5 mio plus you need to fork over another million or so to make it habitable (assuming you can get a permit to do so)... and then you find you still have to contend with neighbors bent on making your life a living hell... it makes zero sense to purchase in Switzerland, IMO.

Far better value - and quality of life - elsewhere.
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Old 28.11.2011, 12:35
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Re: Housing bubble about to explode in the Arc Lemanique

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Remember that during the 90's bubble burst, in Geneva, prices went down by 35-40%.
Sorry, but I don't think anything like that is going to happen around here anytime soon. Much different scenerio from then. First, there is free movement of persons, and a large number of EUs and companies have been flocking here in recent years. Neighboring France always took the overflow but that is nearly saturated and at GVA prices now as well.

A reflection of supply and demand as others have said, and still demand will far outstrip supply for many years to come. Even last week I read that with all the Greek and Spainish people flocking here for economic reasons, they were struggling for find housing.
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Old 28.11.2011, 12:46
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Re: Housing bubble about to explode in the Arc Lemanique

the bubble didn't fully pop in london, but there was a definite slump and perhaps more to come.

no doubt in switzerland we are in a housing boom. i would expect this to continue into bubble territory until it pops due to:

- unemployment
- rising interest rates
- impact of global financial crisis

on the opposite side, the prices could be sustained/increased due to:

- SNB money printing devaluing the CHF leading to nominal house price increases (but a fall in real prices)
- potential changes in law to remove eigenmietwert

my view: we might have a mid-term 'pop' due to the factors listed above, but long term, i think the SNB has dropped the ball and we'll see CHF devaluation eroding mortgage debt.
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Old 28.11.2011, 13:06
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Re: Housing bubble about to explode in the Arc Lemanique

I think everyone agrees that in the past 5 years the prices in the Lac Leman area have grown a bit out of proportion whether it be due to expats, low interst rates, whatever.... the question is when will it stop.

I saw a particular house that was 5,300 CHF/m2 in 2008. Today a similar place in the the same commune was selling for 7,700 CHF/m2!! Clearly something is wrong... it is a bubble? and will it explode? I am not knowledgeable enough to answer but I won't be buying property in Switzerland any time soon. Having said that, the bubble is supposed to pop for the last 3 years and it just gets bigger and bigger

I guess the OP is just highlighting for people to do their due diligence.
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  #27  
Old 28.11.2011, 13:13
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Re: Housing bubble about to explode in the Arc Lemanique

Just a few observations from me. I bought an apartment outside Geneva in late 2009. There are so many people fighting to buy every half-way decent apartment or house here because of simple supply and demand. The supply is very restricted, and demand is high as so many people still think Geneva is a much better place to be than most of the rest of Europe.

You can fix interest rates now for 10 years at 2.35%, so where you are seeing 3%+ in a couple of years I'm not sure.
Here is Postfinance's interest rate chart:
2 years 1.15%
3 years 1.10%
4 years 1.35%
5 years 1.55%
6 years 1.80%
7 years 2.00%
8 years 2.20%
9 years 2.25%
10 years 2.35%

Personally I am not worried about my investment.
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  #28  
Old 28.11.2011, 13:59
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Re: Housing bubble about to explode in the Arc Lemanique

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There are so many people fighting to buy every half-way decent apartment or house here because of simple supply and demand.
I'm not questioning the housing shortage (which may reduce significantly with the crisis which will hit the arc lemanique) but rather whether it is risky or wise to buy nowadays. In say NY or London, there is even a bigger housing shortage and this didn't disappear with the crisis.

It's just that people over there buy far less as owning real estate is less attractive compared to renting. This puts downwards pressure on prices. And this will be the situation here as well.

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You can fix interest rates now for 10 years at 2.35%, so where you are seeing 3%+ in a couple of years I'm not sure.
Check out comparis to see where the 10y rates were just 3 years ago (2008): Near to 5% - the historic average btw

http://www.comparis.ch/hypotheken/zi...px?product=275

Or do you believe the SNB (Swiss National Bank) will leave rates at 2.35% forever? SNB has already warned that they will look into introducing pressure on the housing market mortgage once this crisis is over (...if the crisis doesn't solve the problem by itself, that is..). Just read any of the interviews with Hildebrand (the SNB boss).

So real estate prices will come down either as a result of the crisis or as a result of increased rates.

Your 2009 investment might be safer as you didn't pay the 2011 prices and as long you don't have to renew your loan in 1-2 years from now.
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Old 28.11.2011, 14:05
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Re: Housing bubble about to explode in the Arc Lemanique

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GVA, was that 25K a reservation deposit? If so, I hope you don't have trouble getting your money back.
Got it back this morning after calling the promoteur (waiting for the bank transfer). Was part of the reservation contract if you don't sign eventually (worth checking it out!)
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  #30  
Old 28.11.2011, 14:10
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Re: Housing bubble about to explode in the Arc Lemanique

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Other than a chalet in the mountains, I wouldn't bother with buying a house in Switzerland. You are never suppose to pay it off and for the same money, you'll get a helluva lot more house in other places.
You can get a helluva lot more house in other ... parts of Switzerland. We could never afford our house in the UK. As always, location, location, location - and it works both ways. Here you can still get fabulous houses of character, space, land, peace- and just a few km from the border for shopping. Depends what you want. 30 mins from Yverdon or Neuchatel, 40 to Lausanne or Bern- compared to most commutes in London, a doddle.
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Old 28.11.2011, 14:27
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Re: Housing bubble about to explode in the Arc Lemanique

There's a good small article in the latest (or the one before?) edition of The Economist which highlights that Switzerland (along with Germany) is one of the few remaining countries in Europe where house prices are probably still (slightly) understated. This is supported by two kinds of statistics:
- ratio of house prices vs. rental costs
- ratio of house prices vs. income

May be worthwhile to look this up.
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  #32  
Old 28.11.2011, 14:43
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Re: Housing bubble about to explode in the Arc Lemanique

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There's a good small article in the latest (or the one before?) edition of The Economist which highlights that Switzerland (along with Germany) is one of the few remaining countries in Europe where house prices are probably still (slightly) understated. This is supported by two kinds of statistics:
- ratio of house prices vs. rental costs
- ratio of house prices vs. income

May be worthwhile to look this up.
There is no doubt that the bubble doesn't affect all of Switzerland. It's just the Arc Lemanique (wish I could live elswewhere than here!) and some parts of Zuerich. Just compare on www.home.ch the average selling prices for real estate in two very similar small cities equally near Zuerich and Geneva, respectively: Baden AG and Nyon VD. In Baden, which has an excellent public transport link to Zuerich (and a nice city anyway), real estate prices are 50% of those in Nyon. This doesn't make sense. Yes, Baden has no lake but otherwise it's pretty similar to Nyon in size, quality of life, infrastructure and economy.
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Old 28.11.2011, 14:44
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Re: Housing bubble about to explode in the Arc Lemanique

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Other than a chalet in the mountains, I wouldn't bother with buying a house in Switzerland. You are never suppose to pay it off and for the same money, you'll get a helluva lot more house in other places.
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I understand that..but where is pride of ownership? Basically, you end up renting at a discounted rate...and what do you have to show for after 30 years of paying discounted rent?

I think there is a huge difference between owning a house and resting it. what you are talking here is purely from Cashflow point of view that it is same as resting on discounted rate. No it is not.

When you are buying a place you own it and are responsible for appreciation or depriciation of the value of underlying asset as well as its maintenance and and operational obligations. So when someone buy a place and he pay 20% capital up front. Now in 5-10 years when the property goes up by 10% you make a neat 50% return on your 20% capital. People have seen appreciation of 5%-50% in last 10 years in Switzerland meaning they got 25% to 250% on the capital employed on mark to market basis. Saving on rent on top of it.

But there is a negative side which is excessively high capital gains tax in Switzerland for a property bought recently (like in 10 years).

Now the question o bubble, there is no doubt that Switzerland has a real estate bubble at this point of time. The calculation explained above works in other direction as well. Meaning if you bought something for 1 million and paid 200K as capital. Now if the property looses 10% meaning 100K then you are sitting on a loss of 100K or 50% of your capital. in the proportion you need to inject capital as well on your original loan which in this case works out to be 20K.

Now Switzerland is looking very bad in terms of near term economic outlook. All the countries around are in severe liquidity and deficit crises. It is going to effect Switzerland in very near future. The Unemployment rate is bound to go up. (In fact went up by 10 bass point last month). Swiss frank will loose value as it is tied to Euro now and there is going to be reduced liquidity. So although the CHF will loose value, once the unemployment and export suffer, the housing sector should loose value. I would stay put on the long call.

Euro crises is going to hurt CH economy far more than the US crises 2 years back. Also then the EU and mainly Switzerland has lots of cushion in terms of bearing the US slowdown but right now the cushions and suspensions are wearing out. Larger housing market in Switzerland was driven was expats trying to reduce rent burden and when unemployment goes up these will be the first people to put the property in the market.

Lets wait and watch the space..
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  #34  
Old 28.11.2011, 14:56
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Re: Housing bubble about to explode in the Arc Lemanique

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`
Hi how do you get your deposit back? Did you just sign a reservation contract?
just a reservation contract with a "clause suspensive" allowing me to retire within a month's time and before the "real" contract would be signed. The contrat d'achat wasn't even prepared yet.
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Old 28.11.2011, 15:16
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Re: Housing bubble about to explode in the Arc Lemanique

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Other than a chalet in the mountains, I wouldn't bother with buying a house in Switzerland. You are never suppose to pay it off and for the same money, you'll get a helluva lot more house in other places.
I can also get a heck of a lot more food for what I pay here, but since I'm hungry here, that's not really relevant, is it??

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I understand that..but where is pride of ownership? Basically, you end up renting at a discounted rate...and what do you have to show for after 30 years of paying discounted rent?
a lot more cash left over?
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Old 28.11.2011, 15:21
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Re: Housing bubble about to explode in the Arc Lemanique

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its simple supply and demand.. there arent enough house/apartments. People still need a roof over their head no matter what the prices are.. there is no way they will drop, worse case is they will level off surely?

even if interest rates went up 2 % mortgage rates are still extremely reasonable and cheaper than renting.

Im opening my eyes and im not seeing what you are seeing for sure....
maybe cause you're wearing your I-have-a-house-to-sell glasses...?
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Old 28.11.2011, 17:25
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Re: Housing bubble about to explode in the Arc Lemanique

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I genuinely beleive that the world economy is in such a mess because of articles like this and people promoting them/beleiving them.
Stops everyone spending and ends up becoming a self fullfilling prophecy..
If this is what you genuinely think, then you would genuinely have it wrong! If you look at the economic stats of Europes periphery as well as its core, its an absolute shambles (and those stats are more likely underestimating). They have all been pretty much running up deficits for a high number of years and stuffing those deficits into more government debt that they then rolled over into ever falling interest rates. Those are the structural problems, now add the bailouts into that also and it doesnt look too good at this time. And those figures do not include the fact that banks in the Eurozone havnt even been recapped yet. Situation in the US is a tag team who's the worst. The profligate far outnumbered the thrifty. The only reason the media run the end of the world articles is so that it forces the hands of even the most financially conservative politicians to begin considering new rounds of taxpayer bailouts and to buy up bonds in an even more financially integrated Europe.

Back on topic . I would imagine the market here still has legs in the short term. The 'rich' economic refugees from the Eurozone are still coming at this stage, but it is especially the areas where they are going where I would avoid (the usual suspects)
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Old 28.11.2011, 17:46
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Re: Housing bubble about to explode in the Arc Lemanique

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There's a good small article in the latest (or the one before?) edition of The Economist which highlights that Switzerland (along with Germany) is one of the few remaining countries in Europe where house prices are probably still (slightly) understated. This is supported by two kinds of statistics:
- ratio of house prices vs. rental costs
- ratio of house prices vs. income

May be worthwhile to look this up.

Article mentioning Germany is here: http://www.economist.com/node/18250385

Letters mentioning Switzerland on the article are here: http://www.economist.com/node/18438228
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Old 28.11.2011, 18:08
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Re: Housing bubble about to explode in the Arc Lemanique

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I can also get a heck of a lot more food for what I pay here, but since I'm hungry here, that's not really relevant, is it??



a lot more cash left over?

Don't forget on a property of 500k I'm currently paying 15000 a year in Eigenmietwert added to my taxable income. Sure I can deduct the mortgage interest costs, but if there wasn't a rental advantage in owning, why would this exist?

Rents in Zurich-Oerlikon (Berninastr.) in 1999: 1500 CHF per month.
Today: 2100
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Old 28.11.2011, 18:30
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Re: Housing bubble about to explode in the Arc Lemanique

Yes, I believe real estate in the arc lemanique is too expensive to be an interesting investment and we therefore bought in neighbouring France. However I do not buy the panic and scaremongering of an imminent crash in the arc lemanique. It is not true to say that prices in neighbouring France are almost similar to Geneva. I see them rather as about 40 to 50% cheaper. That difference should really only be 20% in my opinion and it is my belief that the gap will gradually narrow. But Geneva and its wider area will always remain expensive. It is not Ireland or Spain. The difference is the economic base and the salaries are there to sustain such prices. As long as that doesn't change (and I don't think it will) there will be no major drop. I see only the top end of the market (5 million +) as being vulnerable. In that segment price inflation has been ridiculous.
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