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-   -   Advisable to buy property in Zurich? (https://www.englishforum.ch/housing-general/288923-advisable-buy-property-zurich.html)

Calito 01.01.2019 14:46

Advisable to buy property in Zurich?
 
Hi forum experts -

I am moving from San Francisco Bay Area to Zurich on 6th Jan and have a permanent work contract. I have a 2 bed 2 bath condo in bay area that will be going up for sale in Jan 2019. I bought the condo back in 2015 when I had no intentions of moving out of US - so a mortgage made sense longer term. Given I am selling in just 3 years I won't be making a profit - more just getting back my downpayment and the principal I have paid down.

Selling in US is a done decision and I am not looking for feedback on that. I am hoping for some insight into the Zurich housing industry.

Does it make sense to re-invest the money I'll get from the condo sale in US in Zurich? Should I consider living in this property or renting it out?

I am NOT a US citizen, nor a EU citizen. I am expecting to receive a B permit when I register in Zurich. I am single and will be living by myself.

Thanks in advance!

roegner 01.01.2019 14:54

Re: Advisable to buy property in Zurich?
 
First come here, see what permit you get and then you can look around where you might want to live/buy.

Personally IŽd also wait until the probation period is over.

meloncollie 01.01.2019 14:57

Re: Advisable to buy property in Zurich?
 
While for us it made sense to purchase our house once we had an idea that we would stay here, while I hated renting with a passion as home ownership is very important to me, I am nonetheless glad that we waited and did not buy at first.

You see, the Swiss market is not like many others. You really need local knowledge to understand what is best for you. For some niches the market is dry as a bone, if you are looking for certain types of properties only one or two may come on the market in any given year, competition for those is fierce. Yet on the other hand, some sectors are overbuilt, those properties sit on the market for years. Lots of properties are overvalued. Given the paucity of the market it's hard to set prices, and emotion plays a huge part for many sellers. Are we in a bubble and if so, when will it burst? Who knows, this has been debated for years. It's all about local knowledge. Making a mistake here can be costly, as most cantons impose a short term sale tax penalty.


Were it me, I'd rent for a few years, first to decide if Switzerland is someplace you wish* to live long term, and secondly to gather that all important local knowledge.

All the best with the move.


*As you are non-EU, it would be prudent to keep in mind that the ability to live here long term isn't guaranteed.

Calito 01.01.2019 16:29

Quote:

Originally Posted by roegner (Post 3026635)
First come here, see what permit you get and then you can look around where you might want to live/buy.

Personally IŽd also wait until the probation period is over.

Hi roegner - definitely. I don't plan to buy immediately. I am in a furnished apartment for the first two months while I wait for my shipment and plan to sign a lease for a rental place after that.

Just hoping to understand the contrast between Swiss and US (bay area) markets. Thank you for your response!

Hi meloncollie - thank you for your response. Agree with your advice to wait before buying.

Quote:

Originally Posted by meloncollie (Post 3026637)
While for us it made sense to purchase our house once we had an idea that we would stay here, while I hated renting with a passion as home ownership is very important to me, I am nonetheless glad that we waited and did not buy at first.

You see, the Swiss market is not like many others. You really need local knowledge to understand what is best for you. For some niches the market is dry as a bone, if you are looking for certain types of properties only one or two may come on the market in any given year, competition for those is fierce. Yet on the other hand, some sectors are overbuilt, those properties sit on the market for years. Lots of properties are overvalued. Given the paucity of the market it's hard to set prices, and emotion plays a huge part for many sellers. Are we in a bubble and if so, when will it burst? Who knows, this has been debated for years. It's all about local knowledge. Making a mistake here can be costly, as most cantons impose a short term sale tax penalty.

Could you share some examples about what you mean by the bubble in the Swiss market?

Quote:

Originally Posted by meloncollie (Post 3026637)
Were it me, I'd rent for a few years, first to decide if Switzerland is someplace you wish* to live long term, and secondly to gather that all important local knowledge.

All the best with the move.


*As you are non-EU, it would be prudent to keep in mind that the ability to live here long term isn't guaranteed.

As a noobie & a segue - how do I "thank" someone for a post?

omtatsat 01.01.2019 16:35

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by Calito (Post 3026634)
Hi forum experts -

I am moving from San Francisco Bay Area to Zurich on 6th Jan and have a permanent work contract. I have a 2 bed 2 bath condo in bay area that will be going up for sale in Jan 2019. I bought the condo back in 2015 when I had no intentions of moving out of US - so a mortgage made sense longer term. Given I am selling in just 3 years I won't be making a profit - more just getting back my downpayment and the principal I have paid down.

Selling in US is a done decision and I am not looking for feedback on that. I am hoping for some insight into the Zurich housing industry.

Does it make sense to re-invest the money I'll get from the condo sale in US in Zurich? Should I consider living in this property or renting it out?

I am NOT a US citizen, nor a EU citizen. I am expecting to receive a B permit when I register in Zurich. I am single and will be living by myself.

Thanks in advance!

Well hope you have as a starter of maybe 300000-500000 deposit because thats what you will need to get something in Zurich. But nobody buys here they simply get a morgage and pay the bank back over a couple of lifetimes.

ivank 01.01.2019 16:50

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by omtatsat (Post 3026650)
Well hope you have as a starter maybe 500000

you have no clue of the property prices in bay area, do you?

miniMia 01.01.2019 17:06

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by ivank (Post 3026652)
you have no clue of the property prices in bay area, do you?

Except you don't need a 20% deposit in the Bay Area.

Guest 01.01.2019 17:14

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by omtatsat (Post 3026650)
Well hope you have as a starter maybe 500000 deposit because thats what you will need to get something in Zurich. But nobody buys here they simply get a morgage and pay the bank back over a couple of lifetimes.
Heres a good sample

https://www.homegate.ch/kaufen/immob...ap=ctn_zh&ep=2

You can only get a mortgage if you buy the house smartass....

omtatsat 01.01.2019 17:31

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by ivank (Post 3026652)
you have no clue of the property prices in bay area, do you?

No! Why should I ?

omtatsat 01.01.2019 17:33

Re: Advisable to buy property in Zurich?
 
Quote:

You can only get a mortgage if you buy the house smartass....
Nice language you use for the start of the year. Not changed a bit

Calito 01.01.2019 17:40

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by miniMia (Post 3026655)
Except you don't need a 20% deposit in the Bay Area.

Is there a standard expectation for downpayment/ deposit in Switzerland? Does it vary by whether you are a Swiss citizen or non-EU citizen etc?

As an example, as a non-US citizen and a non-green card holder I had to put down a 20% downpayment in order to qualify for a mortgage in Bay area.

Guest 01.01.2019 17:44

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by Calito (Post 3026667)
Is there a standard expectation for downpayment/ deposit in Switzerland? Does it vary by whether you are a Swiss citizen or non-EU citizen etc?

As an example, as a non-US citizen and a non-green card holder I had to put down a 20% downpayment in order to qualify for a mortgage in Bay area.

Depends on the canton, Zurich is 20%, nationwide I thought minimum is 10% and maximum is 30%

fatmanfilms 01.01.2019 17:45

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by Calito (Post 3026667)
Is there a standard expectation for downpayment/ deposit in Switzerland? Does it vary by whether you are a Swiss citizen or non-EU citizen etc?

As an example, as a non-US citizen and a non-green card holder I had to put down a 20% downpayment in order to qualify for a mortgage in Bay area.

Min 20% for owner occupied for everyone.

Belgianmum 01.01.2019 17:48

Re: Advisable to buy property in Zurich?
 
Quote:

Depends on the canton, Zurich is 20%, nationwide I thought minimum is 10% and maximum is 30%
The 20% minimum down payment is the same for all cantons. At least 10% of that has to be cash but the rest can be from the pension fund.

fatmanfilms 01.01.2019 17:51

Re: Advisable to buy property in Zurich?
 
Quote:

Depends on the canton, Zurich is 20%, nationwide I thought minimum is 10% and maximum is 30%
There is no maximum, it's quite possible to pay 100% cash.

omtatsat 01.01.2019 17:51

Re: Advisable to buy property in Zurich?
 
Taxes are high on fully owned properties. Thats why one pays the morgage off to the bank over a lifetime. The bank owns it in the meantime.

https://www.ch.ch/en/real-estate-foreign-national/

ThomasSSS 01.01.2019 18:06

Re: Advisable to buy property in Zurich?
 
20% is the normal minimum, 10% can instead be a pledge against a pillar 2 pension fund, (meaning that you only need 10% cash on hand) but that isn't relevant until you've built up such a Swiss fund.

It is normal to amortize down to 65% loan-to-value, and then pay only interest. This means that when the mortgage terminates (10 years is the longest fixed mortgage I've seen advertised) you need to refinance. For this reason they have an affordability criteria based on what happens if interest rates go to 5% - will making a 5% p/a interest payment on the remaining balance be more than 1/3 of your pre-tax income? A subtle point that matters for some is how much of your bonus and stock grants should count for this purposes, and different banks can do this differently.

So if you have 20%+ down, e.g. because you sold a place and had real equity in it, you can work backwards to see how much you can afford. Also, you might get a lower rate if you can put 35% down and avoid amortization.

There is a comparis database showing that advertised apartment purchase prices in Zurich went from 6k/m^2 in 2007 to around 10k in 2012 and since then have more or less slowly risen past 12k/m^2. Whether this is a sign of strength, or a sign of a potential bubble is left as an exercise for the reader.

Guest 01.01.2019 18:21

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by fatmanfilms (Post 3026671)
There is no maximum, it's quite possible to pay 100% cash.

Maximum demanded ;)

Off course you can just pay your house off at once if you please..

Guest 01.01.2019 18:23

Re: Advisable to buy property in Zurich?
 
Quote:

Originally Posted by omtatsat (Post 3026672)
The bank owns it in the meantime.

Nope.

fatmanfilms 01.01.2019 18:26

Re: Advisable to buy property in Zurich?
 
Quote:

Maximum demanded ;)

Off course you can just pay your house off at once if you please..
Who demands 30% for a primary residence?
If you pay 35% then you won't need to make any capital repayments, unless the value falls.


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