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  #21  
Old 08.06.2020, 17:59
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Re: Will housing market crash?

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A lake view will always remain a desirable location.
Are you looking for a mere investment or a home? It's a very British (and to an extent American I guess) attitude always to want to make money on property and "add value". But bear in mind that in Switzerland, the barriers to buying in the first place are quite high and the majority buy once and stay for ever. That, and the tax treatment of selling property, makes the market more stable and less susceptible to large price fluctuations.
Basically I'm saying, don't underestimate the value of a home. Financially, because current interest rates make a mortgage much cheaper than renting, and non-financially because it's your *home* first and foremost.
I want to buy a home not for investment
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  #22  
Old 11.06.2020, 22:22
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Re: Will housing market crash?

a bit off topic, but related to the recent post of english_fells:
As an "odd swiss" I wonder if there is any % limit for price reduction (which make sense) while negotiating on a property (as a buyer).


I know my question might sound strange. nevertheless, in different countries there are different ranges. e.g. negotiating in middle east countries, India and countries with similar cultures, it will not be offending to offer 30%-50% less than the offered price. Then the negotiation starts.The sellers, usually put up the price accordingly, since they know that such offer can come.
On the other hand, in other countries, offering less then -10% of the price, will sound insulting and the bargain might explode leading to a dead end.



I know that it depends a lot on the buyer/seller and on the property itself. Im also aware that the banks evaluate the property (for mortgage purposes) ,and I can use it as a benchmark. Still, I wonder how much less than this benchmark I can offer as an initial offer?


ps.
I estimate that there are not so many candidates to buy this property at the moment. Especially due to COVID-19 situation
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  #23  
Old 11.06.2020, 23:02
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Re: Will housing market crash?

ZKB says, they will renew the mortgage even after you've retired.
Promise.
Pinky swear ;-)

https://www.zkb.ch/de/pr/pk/finanzie...ruhestand.html
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  #24  
Old 12.06.2020, 06:44
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Re: Will housing market crash?

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a bit off topic, but related to the recent post of english_fells:
As an "odd swiss" I wonder if there is any % limit for price reduction (which make sense) while negotiating on a property (as a buyer).


I know my question might sound strange. nevertheless, in different countries there are different ranges. e.g. negotiating in middle east countries, India and countries with similar cultures, it will not be offending to offer 30%-50% less than the offered price. Then the negotiation starts.The sellers, usually put up the price accordingly, since they know that such offer can come.
On the other hand, in other countries, offering less then -10% of the price, will sound insulting and the bargain might explode leading to a dead end.



I know that it depends a lot on the buyer/seller and on the property itself. Im also aware that the banks evaluate the property (for mortgage purposes) ,and I can use it as a benchmark. Still, I wonder how much less than this benchmark I can offer as an initial offer?


ps.
I estimate that there are not so many candidates to buy this property at the moment. Especially due to COVID-19 situation
Properties in and around Zug tend to go close to their asking prices (+/- 10%), though the market is not transparent. Forced sales are relatively rare . Properties can stay on the market for years (literally) if they are over-priced. Bank estimates are going to be conservative.
You can always make a very low offer, you will find out quickly if it is high enough for negotiations to start.
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  #25  
Old 13.06.2020, 13:34
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Re: Will housing market crash?

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Well, it did happen in 90s and took rather long to recover
True, nonetheless the outlook for the coming years (5-10) seems very positive.

No reason on the horizon for rising interest rates, quite the contrary. And as long as FMOP applies, immigration will make sure demand keeps rising.

It's only a matter of time until the dreaded "Eigenmietwert" is history. That will make home ownership (coupled with paying back the mortgage) even more attractive, and increase demand accordingly.
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  #26  
Old 13.06.2020, 14:30
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Re: Will housing market crash?

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True, nonetheless the outlook for the coming years (5-10) seems very positive.

No reason on the horizon for rising interest rates, quite the contrary. And as long as FMOP applies, immigration will make sure demand keeps rising.

It's only a matter of time until the dreaded "Eigenmietwert" is history. That will make home ownership (coupled with paying back the mortgage) even more attractive, and increase demand accordingly.
You are somewhat bullish, I suspect there will e a recession for many years.

If Eigenmietwert is ended, so will deduction of interest, 'saving tax' seems to tick peoples boxes.
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  #27  
Old 13.06.2020, 17:32
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Re: Will housing market crash?

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True, nonetheless the outlook for the coming years (5-10) seems very positive.

No reason on the horizon for rising interest rates, quite the contrary. And as long as FMOP applies, immigration will make sure demand keeps rising.

It's only a matter of time until the dreaded "Eigenmietwert" is history. That will make home ownership (coupled with paying back the mortgage) even more attractive, and increase demand accordingly.
A lot of people have wages decreasing or stagnating. As a consequence it becomes harder to save the money for the initial payment and qualify for a mortgage.

Currently selling a house is as difficult as buying one, maybe more difficult. Even you go 10% under the market price, it's still hard to sell. Should you need to sell within 2 to 3 months you might have to go 20-30% below the market price. I suspect the decline might already be happening.
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  #28  
Old 13.06.2020, 17:53
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Re: Will housing market crash?

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Currently selling a house is as difficult as buying one, maybe more difficult. Even you go 10% under the market price, it's still hard to sell. Should you need to sell within 2 to 3 months you might have to go 20-30% below the market price. I suspect the decline might already be happening.
I don't see (from advertised prices) any signs of it on Arc Lemanique.
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  #29  
Old 13.06.2020, 17:59
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Re: Will housing market crash?

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I don't see (from advertised prices) any signs of it on Arc Lemanique.
Advertised & sale prices may be completely different.
Just look at second hand cars on the forum, the ones that sell achieve 65% of original 'bargain' price.
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  #30  
Old 13.06.2020, 18:24
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Re: Will housing market crash?

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Even you go 10% under the market price, it's still hard to sell. Should you need to sell within 2 to 3 months you might have to go 20-30% below the market price.
Whether or not there's a decline I don't know, but you show a common misconception about "market prices", confusing it perhaps with some vague idea of an official valuation. Just because someone says a house is worth x amount doesn't make that the market price.

So fundamentally, if you need to drop your price by 20% it's because the market price is 20% lower than what you were asking.
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Old 13.06.2020, 19:21
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Re: Will housing market crash?

From my searchings, if the price for a property looks good ask yourself, what is wrong with it ?

Old fashioned inefficient heating ?
Unreachable with public transport ?
Close to a church ?
Asbestos roof ? (Old Eternit roof !)
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  #32  
Old 13.06.2020, 19:39
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Re: Will housing market crash?

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Whether or not there's a decline I don't know, but you show a common misconception about "market prices", confusing it perhaps with some vague idea of an official valuation. Just because someone says a house is worth x amount doesn't make that the market price.

So fundamentally, if you need to drop your price by 20% it's because the market price is 20% lower than what you were asking.
This has nothing to do with the official valuation. "Official valuation" is mainly Swiss thinking and based on the idea that the price depends on the cost to build the house. An element of culture.

But you still forget to consider the time component. You can sell at a higher price if you are patient and wait let's say more than one year. Provided the market doesn't move in the wrong direction for you.

Anyway my observation is the market is quite illiquid at the moment with many people being priced out and the sellers wishing and waiting that the market resumes its direction. And I think this happened before Corona.
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Old 13.06.2020, 21:10
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Re: Will housing market crash?

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This has nothing to do with the official valuation. "Official valuation" is mainly Swiss thinking and based on the idea that the price depends on the cost to build the house. An element of culture.

But you still forget to consider the time component. You can sell at a higher price if you are patient and wait let's say more than one year. Provided the market doesn't move in the wrong direction for you.

Anyway my observation is the market is quite illiquid at the moment with many people being priced out and the sellers wishing and waiting that the market resumes its direction. And I think this happened before Corona.
In case you hadnít seen it UBS do a fairly comprehensive view of the housing market each quarter. It lags by a few months but it exists up to q1 2020.

https://www.ubs.com/global/en/wealth...q1-2020-en.pdf

It covers locations and different housing types and is a good read for a view on the market.
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  #34  
Old 13.06.2020, 21:14
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Re: Will housing market crash?

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In case you hadn’t seen it UBS do a fairly comprehensive view of the housing market each quarter. It lags by a few months but it exists up to q1 2020.

https://www.ubs.com/global/en/wealth...q1-2020-en.pdf

It covers locations and different housing types and is a good read for a view on the market.
Going forward 10-20 years & looking at those graphs, I won't be investing in property in CH anytime soon, I did consider 17 years ago, prices seemed reasonable, very cheap verses UK at the exchange rates of the time, however the stock market has been better. I don't think it will be different over the next 15 years. I don't gear investments so look at actual return.
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  #35  
Old 14.06.2020, 16:39
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Re: Will housing market crash?

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You are somewhat bullish, I suspect there will e a recession for many years.
Multi-year recession, why? Even if FMOP got cancelled that wouldn't necessarily reduce net immigration.
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If Eigenmietwert is ended, so will deduction of interest, 'saving tax' seems to tick peoples boxes.
And?
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  #36  
Old 14.06.2020, 16:46
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Re: Will housing market crash?

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Currently selling a house is as difficult as buying one, maybe more difficult.
That's a selfcontradiction, at most one can be true. If you don't get a deal financed it's simply above your means.
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Even you go 10% under the market price, it's still hard to sell. Should you need to sell within 2 to 3 months you might have to go 20-30% below the market price. I suspect the decline might already be happening.
My bet would be that you overpaid and realise that fact only now. Obviously Corona is no help, but that effect is less than 4 months old.

Real estate in CH is illiquid, if you want to sell quickly you need to make it above-average attractive. There's an obvious means to that end.
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  #37  
Old 14.06.2020, 18:46
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Re: Will housing market crash?

i got accepted for a mortgage, at the time i was on the rav, it was january, and i had been laid off due to the really bad snow, and was unable to work as a bricklayer,(i was temping aswell)
i had made the application in december,while it was still ok weather,
i told the bank manager, hes reply was,
"you are putting down a 20% deposit, i can see you have savings of the same amount, i can see you have been in work constantly for the past 4 years"
if you default, we would sell the house and be immediatly in profit of over 100k"
i returned to work in the febuary, and have been making double payments eversince, the property has gone up 30%, so even if there was a crash, im well insulated
the point is, a mortgage is almost certainly cheaper than rent,i pay 700 p.m plus over pay 700 per month,a similar house would cost me 2500 to rent you get to own it, and youre own washing machine,
now i know there are a lot of armchair experts on this forum probably tut tutting and doubting this story, .i have all paperwork to prove this
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  #38  
Old 15.06.2020, 09:52
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Re: Will housing market crash?

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That's a selfcontradiction, at most one can be true.
Not necessarily. The seller has high expectation and wants to maximize the selling price. At the same time the buyer wants to get a lower price.

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My bet would be that you overpaid and realise that fact only now. Obviously Corona is no help, but that effect is less than 4 months old.
This would be a low odds bet.
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Old 15.06.2020, 12:13
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Re: Will housing market crash?

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Not necessarily. The seller has high expectation and wants to maximize the selling price. At the same time the buyer wants to get a lower price.
That applies all the time and is thus ruled out by your "currently".
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Old 15.06.2020, 19:34
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Re: Will housing market crash?

When people quote monthly mortgage payments here they tend to only quote the interest component of the mortgage which is what makes buying seem so much more attractive compared to renting. What they don't include in that monthly number is (i) the amortization payment necessary to bring the LTV of your home down from 80% to 65% over a 15 year period, and (ii) the annual maintenance expense which is assumed to be around 1% of the purchase price.

So we can take a CHF 1.5m house as an example. You put 20% down (300k) and take out a 1.2m mortgage (80% LTV). I found a 10 year fixed-rate mortgage for 0.74% which means your annual interest expense is 8,880 or 740/month. Such a place would probably rent for 3-3.5k/month which is why buying seems attractive. But, you need to factor in the annual amortization of 15,000 (1,250/month) for the next 15 years to bring the mortgage down to 975K (or 65% of the original price of 1.5m) and annual maintenance of 1% of 1.5m for 15,000 (1,250/month). That takes the total annual cash outflows for ownership to 38,769 (3,231/month).

If house prices rise by 2% annually, that house is now worth 2,018,803 in 15 years' time. Your mortgage has decreased to 975k (you amortized the loan down to 65% LTV of purchase price) and so your equity has increased to 1,043,803. You put 300k down and had outflows (interest, maintenance and amortization payments) of 569,800 over that 15 year period. Your annual return (IRR) on that 300k investment works out at 2% over the 15 year period. If house price inflation was 4% instead of 2% your IRR goes up to 7%. If there is no house price inflation and prices stay flat your IRR falls to -5%.
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