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Old 05.06.2020, 23:21
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Will housing market crash?

We are new to CH and I wonder if we should buy a house now or wait to see if the prices adjust. I realize that this is a far more stable market than US, but do you think the COVID fiasco will cause a price decrease?
Also some Swiss friends of mine tell me that a correction is overdue in the CH housing market and it is bound to happen soon.
FYI, I am interested to buy something with 3BR in Lausanne/Morge area. I rather invest on lake view than square footage.

I realize no one can know the answer for sure but I would like to hear Thank your advise/opinions. Thank you!
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Old 05.06.2020, 23:29
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Re: Will housing market crash?

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We are new to CH and I wonder if we should buy a house now or wait to see if the prices adjust. I realize that this is a far more stable market than US, but do you think the COVID fiasco will cause a price decrease?
Also some Swiss friends of mine tell me that a correction is overdue in the CH housing market and it is bound to happen soon.
FYI, I am interested to buy something with 3BR in Lausanne/Morge area. I rather invest on lake view than square footage.

I realize no one can know the answer for sure but I would like to hear Thank your advise/opinions. Thank you!
Yes I think some level of decrease is coming for certain.
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Old 05.06.2020, 23:46
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Re: Will housing market crash?

When I came here years ago the same people that say it today said by then also that the prices where to high and that a crash was bound to happen.

They were wrong then, why should they be right today?

But yeah if they keep saying it for 50 years pretty good chance that one day they can say "see, I told you so...." Houses will still be worth more than when they started their doomsday callings.......
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Old 06.06.2020, 00:22
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Re: Will housing market crash?

I think it will only be the case where many people who would have to renew a mortgage would no longer pass the means test to get the mortgage. Other than that - have a look through the thread about a house being sold before the person even got to view it. Doesn't sound like a cooling down market to me... And the arc lémanique area is particularly sought after.
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Old 06.06.2020, 12:07
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Re: Will housing market crash?

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When I came here years ago the same people that say it today said by then also that the prices where to high and that a crash was bound to happen.

They were wrong then, why should they be right today?

But yeah if they keep saying it for 50 years pretty good chance that one day they can say "see, I told you so...." Houses will still be worth more than when they started their doomsday callings.......
You have to remember that Swiss house prices were hugely depressed in the late 80's & took 20 years to recover. 7% mortgage rates did not help.
Allowing 'B' permit holders to buy added a huge no of purchasers to the market, this is a one off event & should be remembered as such.
New hire salaries for expats are considerably lower than 20 years ago, although similar in £ / USD.
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Old 06.06.2020, 13:25
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Re: Will housing market crash?

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.
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Old 06.06.2020, 15:29
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Re: Will housing market crash?

I don't see the price of houses going down.

In fact there are more people in Switzerland buying property than ever before. As the share market gets less returns, those with spare cash look for alternative investments. I recently read a review that 10 years ago, 6% of mortgages was provided for second properties. Now it is 10%. This basically means that the rich are getting richer.. and you know the rest.

However... like Kittster said, there will be people who cannot afford the increased mortgage rates when their mortgage expires. And increased unemployment this year. Hence homes changing hands.
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Old 06.06.2020, 16:01
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Re: Will housing market crash?

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However... like Kittster said, there will be people who cannot afford the increased mortgage rates when their mortgage expires. And increased unemployment this year. Hence homes changing hands.
Most of the jobs lost will imho be positions of people who where not in the position to buy a house anyway, and some other professions became much more popular.
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Old 06.06.2020, 17:50
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Re: Will housing market crash?

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Most of the jobs lost will imho be positions of people who where not in the position to buy a house anyway, and some other professions became much more popular.
Well, the mortgage on my apartment (owned by my dad) is up for renewal next year, I would not pass the means test and I am not sure they will give my dad another long-term mortgage at over 70 years of age.

Last edited by Kittster; 07.06.2020 at 11:20. Reason: Clarification
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Old 06.06.2020, 20:04
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Re: Will housing market crash?

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Well, the mortgage on my apartment is up for renewal next year, I would not pass the means test and I am not sure they will give my dad another long-term mortgage at over 70 years of age 🤷🏼♀️
I very much doubt you‘ll have to worry. As long as you made the payments until now, your lender will be happy to keep taking the interest.

BTW 70 is the new50....
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Old 06.06.2020, 20:30
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Re: Will housing market crash?

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I very much doubt you‘ll have to worry. As long as you made the payments until now, your lender will be happy to keep taking the interest.

BTW 70 is the new50....
Possibly, but would you want to risk? If your income dropped under the allowed limit, the bank would possibly deny you a new credit. In this case you must sell the house.
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Old 06.06.2020, 21:10
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Re: Will housing market crash?

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Possibly, but would you want to risk? If your income dropped under the allowed limit, the bank would possibly deny you a new credit. In this case you must sell the house.
Possibly, but then they would have to absorb some significant costs. As long as the mortgage payments get made they won’t rock the boat.

It’s even more unlikely if you are paying interest plus reducing the debt.
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Old 06.06.2020, 21:20
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Re: Will housing market crash?

Well, it did happen in 90s and took rather long to recover
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Old 06.06.2020, 22:25
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Re: Will housing market crash?

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Possibly, but then they would have to absorb some significant costs. As long as the mortgage payments get made they won’t rock the boat.

It’s even more unlikely if you are paying interest plus reducing the debt.
The discomforting thought is that it can happen and you have no control. Whatever the bank decides. In truth you own the house, but the bank owns you.
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Old 07.06.2020, 07:32
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Re: Will housing market crash?

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I think it will only be the case where many people who would have to renew a mortgage would no longer pass the means test to get the mortgage. Other than that - have a look through the thread about a house being sold before the person even got to view it. Doesn't sound like a cooling down market to me... And the arc lémanique area is particularly sought after.
What means test? Do you think the banks want to lose money? If you fail to pay your mortgage they will come after you?. But there is no means test when you rnew it? This would cost the bank money, somebody would have to go through papers, tax returns...
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Old 07.06.2020, 07:38
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Re: Will housing market crash?

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What means test? Do you think the banks want to lose money? If you fail to pay your mortgage they will come after you?. But there is no means test when you rnew it? This would cost the bank money, somebody would have to go through papers, tax returns...
The banks don't want to lose money, so that's why they test that you can afford it. This is assessed when you get a mortgage (including on renewals). It doesn't cost the bank anything extra. It's not like they have to hire someone extra to do the review - they already have the employees to do this.
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Old 07.06.2020, 07:40
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Re: Will housing market crash?

In 25 years of mortgages with SBS and then UBS I have never been asked to requalify a mortgage. This despite my income (that they see) falling to zero. They have never seen my wife’s income as she manages that elsewhere.
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Old 07.06.2020, 10:29
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Re: Will housing market crash?

There is no Swiss housing market. The market for a lake-view home in Zollikon is completely different from the market for an apartment in Bern oberland. High demand areas in Zurich and Geneva and tax havens like Zug are likely to have sufficient demand to offset any major price declines. There are 2 "tail risks" that people seem to ignore that I think are real risks:

1) A stabilization of the Eurozone leading to the Euro rising relative to the CHF. This would trigger inflation in Switzerland (something we haven't had for years) which could see the SNB raise rates. Given the inability of the EU to get anything done I view this as a low probability event.

2) An increase in unemployment coupled with Auslander leaving. Swiss salaries are high and Swiss companies are facing intense pressure to cut costs to remain competitive. Covid-19 has shown that work can be done from anywhere which could make it easier for companies to outsource work to cheaper locations. Also, any attempt to limit EU immigration would remove a large driver of demand for housing.

The RAV buys people time to find new work so I wouldn't expect unemployment to lead to forced selling but the real impact would be in 1 to 2 years' time.
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Old 07.06.2020, 12:00
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Re: Will housing market crash?

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What means test? Do you think the banks want to lose money? If you fail to pay your mortgage they will come after you?. But there is no means test when you rnew it? This would cost the bank money, somebody would have to go through papers, tax returns...
In fact yes.

The bank Does disallow you a new mortgage if your new situation causes you not to be able to afford it. And chooses their own new interest rate and "extra fees" to 'encourage' you to find a new bank.

They do however give you about a year or more to sort your shit out.

More information here:
https://ratgeber.immowelt.ch/a/der-a...strategie.html

Last edited by Rangatiranui; 07.06.2020 at 12:52.
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Old 07.06.2020, 20:38
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Re: Will housing market crash?

the monthly repayments on my mortgage are one quarter of what i would pay in rent for the same house
i put 100k down on a 550 k house and borrowed 450k at a fixed rate of 1%for the next 10 years,
i got a bargain house in gossau , (2008), i had a purchase fall through on the thursday, i went straight on homegate, saw this house, the price and as i knew the exact road, i offered the asking price without viewing,
(anything built after 1980 will almost certainly be of re enforced concrete, so no real structual worries, unless a house is brand new or very recently fully refurbished, the price is reasonably land value plus rohr build value)
i was invited to the open day along with 20 odd swiss people, who immediatley started to criticise the taste in soft furnishings, the deceased owners hand made ceramic wall tiles,and in general were being very petty, in order i think to get a discount,i again offered the price in full verbally, i eally liked the decor and home made knick knacks, and told them i had the money in the bank and showed a letter from the manager that funds were ready.
the son rang me that evening and i bought the house ,with all the furniture in it, we met at a notary and celebrated with champagne,
it turned out one of the tables was a very collectable antique piece, worth thousands of francs, i rang the vendors,this was a few months later, and told them this and offered them the chance to collect it, which they did,
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