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Old 09.05.2020, 15:32
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Push the film - Are the swiss housing prices inflated by Pensionfunds?

I'm worried that housing in Switzerland will soon only be for the very rich (already is).

https://vimeo.com/ondemand/pushthefilm
Push the film, is a movies from UK about how the housing market is artificially growing because investment funds buy building and in some cases leave them empty only because of the capital gains they can make.

Is this happening in Switzerland and is there anything we can do about it as the average working middleclass?

Even couples working 100% with high income has a hard time getting access to housing around here. Is this caused by natural housing demand (individuals buying) or mainly financial housing speculation by investment firms/pension funds?

I'm trying to understand the swiss housing market, since i consider getting something myself but prices seem wildly inflated while considering many areas of Switzerland with empty buildings because rents are unrealistic and build for maximum profit.

Will prices come down significantly? I hear maybe drop 0.5%-2% but why not 10-25% if houses are empty, what would it take to see a 25-50% drop? And shouldn't that be the case in a less speculated true to real economy market? (real economy i mean not influence by speculative investing & bubble like evaluation). Is it sustainable to let companies set a rent high and manipulate book-value for better loans of no one renting? Why is there no law against this?

Thank you in advance.

Last edited by timpeterson; 09.05.2020 at 15:51. Reason: clarification
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Old 09.05.2020, 15:41
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

This is happening everywhere, and is already happening for decades. If a company has rented out a building for 100K/month they can put it in the books as having a certain value, now if they due to lower market demand would rent it out for 50K they'd have to lower the book value, if they leave it empty they can keep the book value high. Heck it is even possible that they used the building to get loans, lowering the value of the building a lot may mean they have to pay up a part of loan or re-finance it.

And yeah some simply have no interest in renting it out, some sell better with a proper renter, others hardly can be sold with a current rental contract, and if they think the property can gain 20% in 3 years, it might be best to just leave it empty for a quick easy sale in future.

Swiss housing market is imho mainly driven by a high demand of people with enough money and little offerings, so there is simply no need to lower the prices atm. it's a sellers market.
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Old 09.05.2020, 16:38
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

No, it will not go down by 10-25%. The demand is still high enough, mortgage rates are low and supply is restricted.
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Old 11.05.2020, 11:01
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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If a company has rented out a building for 100K/month they can put it in the books as having a certain value, now if they due to lower market demand would rent it out for 50K they'd have to lower the book value, if they leave it empty they can keep the book value high. Heck it is even possible that they used the building to get loans, lowering the value of the building a lot may mean they have to pay up a part of loan or re-finance it.
Thanks EdwinNL, this is a really interesting consequence of using leverage in real estate.
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Old 11.05.2020, 11:21
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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Thanks EdwinNL, this is a really interesting consequence of using leverage in real estate.
The Bank might decide the value is half & make a cash call on the borrower, a valuation is an opinion not fact. If rent is being received it backs up a valuation
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Old 11.05.2020, 11:31
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

Pensions funds have definitive obligations in x many years and they need yielding assets with matching duration. The fact that they don't want to manage riskier assets, completely screws up markets.

They need to lend money so much, that they are now lending at negative interest rates (sovereign bonds).

Something similar happens to housing. A portfolio manager sitting somewhere behind a desk, needs to deploy cash, and needs a yield. Evidently ANY yield as long as it's "safe"

If you try to buy the same property, for him a 100k increase in price is a marginal decrease in his yield, and for you it's simply over budget (example).
Extrapolate and see the market just go up.
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Old 11.05.2020, 11:35
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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The Bank might decide the value is half & make a cash call on the borrower, a valuation is an opinion not fact. If rent is being received it backs up a valuation
In theory, loan management best practices.

In reality, the individual(s) at the bank that approved and manage the loan need to approach to their manager and explain the problem. The manager then needs to explain a revenue decrease to higher management......the loan manager is incentivized to do nothing and hope the property is rented soon.

Honest people may do the cash call, a few bankers may just look at the regular debt payments and mind the rest. If someone else is liable for the loan approval, why worry?
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Old 11.05.2020, 13:06
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

Just a hunch, but I used to be a copywriter and I have an idea the OP here and justintheexpat could possibly be personas created by the same person. Starts threads but has no real input into existing threads, doesn't really take advice offered, but tries pushing the envelope with posts that get a little bit more ridiculous. There's also something in the way the posts are written and the rhythm.

I've spent the past few weeks doing a number of refresher courses in writing. As I say, it's just a hunch on my part and you don't have to agree with me, but I just don't like to think the board is being trolled by someone who's having a laugh. Apologies for any offence caused.
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Old 11.05.2020, 15:39
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

Pension funds invest in real estate and leave it empty as the yield on cash deposits is negative. As they have many billions coming in each year they need to do something with it, so about 23% is put into real estate in one form or the other. The maintenance costs will be less than the negative interest they pay so for them it's a very good asset class.
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Old 11.05.2020, 15:47
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

I wonder how will Covid19 affect the housing prices in Switzerland. If it lasts long I would expect the prices to go down with loss of purchasing power.

Also different properties may get affected differently. Apparently at some places houses with garden are becoming more sought after.
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Old 11.05.2020, 16:16
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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Just a hunch, but I used to be a copywriter and I have an idea the OP here and justintheexpat could possibly be personas created by the same person. Starts threads but has no real input into existing threads, doesn't really take advice offered, but tries pushing the envelope with posts that get a little bit more ridiculous. There's also something in the way the posts are written and the rhythm.

I've spent the past few weeks doing a number of refresher courses in writing. As I say, it's just a hunch on my part and you don't have to agree with me, but I just don't like to think the board is being trolled by someone who's having a laugh. Apologies for any offence caused.

Wrong thread? https://www.englishforum.ch/family-m...out-order.html
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Old 11.05.2020, 16:59
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

Never saw that one as I wasn't on here at the weekend
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Old 11.05.2020, 17:34
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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If you try to buy the same property, for him a 100k increase in price is a marginal decrease in his yield, and for you it's simply over budget (example).
Extrapolate and see the market just go up.
Virtually everybody I know who has bought in recent years ended up spending at least 100K, sometimes 200K more than they initially said was the absolute hard limit.

Buying a house is something very emotional and when people get emotional and they have set their eyes on the absolute dream property, caution goes out of the window.

It's individual buyers who are pushing up the prices. The investment funds are rubbing their hands in pleasure as they see the market rise.
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Old 11.05.2020, 18:03
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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Virtually everybody I know who has bought in recent years ended up spending at least 100K, sometimes 200K more than they initially said was the absolute hard limit.

Buying a house is something very emotional and when people get emotional and they have set their eyes on the absolute dream property, caution goes out of the window.

It's individual buyers who are pushing up the prices. The investment funds are rubbing their hands in pleasure as they see the market rise.
Never bought a house but something in these lines happened to us when looking for a place to rent. We generally spend much less than people earning similar wages, our biggest luxury is food - we are very picky food-wise. As such our renting budget was way below of what we could afford.

We saw lots of apartments and in time started forming a quite precise opinion on what we wanted. This pushed our price limit quite above the initial limit. Actually I do not regret it as I really love our current apartment.

Generally I would recommend seeing lots different apartments if you have time. It's not only what the architects imagined, it is all the solutions people came with and how differently utilised and decorated You also notice some things that can be quite useful or cumbersome or fit differently your needs as our needs do indeed differ.
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Old 11.05.2020, 18:10
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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It's individual buyers who are pushing up the prices.
Indeed.

When we sold MIL's house in 2012, my wife's lawyer and I both figured it at 1.3-1.4M, it got two bidders who wanted it, it went for 1.8M in the end, with the buyer needing to dump another 1M to fix it up (worn siding, no insulation, single pane glass, leaking roof, 50 year old heating system, kitchen, baths, etc).

Tom
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Old 11.05.2020, 21:38
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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In theory, loan management best practices.

In reality, the individual(s) at the bank that approved and manage the loan need to approach to their manager and explain the problem. The manager then needs to explain a revenue decrease to higher management......the loan manager is incentivized to do nothing and hope the property is rented soon.

Honest people may do the cash call, a few bankers may just look at the regular debt payments and mind the rest. If someone else is liable for the loan approval, why worry?
Plenty got cash calls in the 90's, I think Swiss mortgage rates exceeded 7% at the time.
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Old 12.05.2020, 09:41
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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Plenty got cash calls in the 90's, I think Swiss mortgage rates exceeded 7% at the time.
Thanks for the pointer. That looks like an interesting event to read about. Minor fraud is sustainable during normal times, but harder conditions reveal it.
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Old 12.05.2020, 11:49
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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Plenty got cash calls in the 90's, I think Swiss mortgage rates exceeded 7% at the time.
But if you lock in with a contract for 10 or even 15 years, currently around the 1.1% (or less) mark, you will not get any cash call as the rate is fixed for the duration of the contract.
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Old 12.05.2020, 12:00
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

What I have noticed is that when I first moved to Zurich (just prior to the GFC), new buildings were geared towards ownership.

Since the GFC, my impression is that new building projects (especially apartments) are rental only. I'm guessing this is because companies can construct these with very cheap money and the rental is a persistent long term income, not to mention the capital gain over time.
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Old 13.05.2020, 12:33
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Re: Push the film - Are the swiss housing prices inflated by Pensionfunds?

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What I have noticed is that when I first moved to Zurich (just prior to the GFC), new buildings were geared towards ownership.

Since the GFC, my impression is that new building projects (especially apartments) are rental only. I'm guessing this is because companies can construct these with very cheap money and the rental is a persistent long term income, not to mention the capital gain over time.

Maybe the city of Zürich is a bit different to the outlying Gemeindes.

A lot of the residential building work going on in Zürich is by housing companies who already own the land and are tearing down appartment blocks they own to replace them by more modern ones, typically making better use of the land, and of zoning laws that have in many parts been relaxed permitting more floors and a higher utilization of ground space than was permitted, say, 50 years ago.

A significant percent of appartments in Zürich are actually not owned by private investors but by Genossenschaften (housing cooperatives). Maybe up to 40% of total appartments. Many of these are not allowed to sell off land or buildings as per their own constitution. They generally charge lower rents than comparable private landlords, and thus keep the overall market price down. Besides actually owning inhabited appartments many also still own reserve land that they are gradually developing as cash becomes available. A lot of the allotments gardens in Kreis 6 that have recently been bulldozed to build appartments are actually owned by such Genossenschaften.
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