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-   -   Is it worth it to buy a house in Switzerland? (https://www.englishforum.ch/housing-general/30703-worth-buy-house-switzerland.html)

Enaj 15.08.2008 11:55

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by Lou (Post 293047)
Ok but do you have a link to this? It is the first time I have heard about such a situation & would be interested in learning more.

Sorry, I don't have a link and wouldn't know how to transplant it even if I did (am not very computer literate). If you really want to know I think you should ask at the social services. I found out through neighbours who lost their house and from friends who are social workers.

andrew1306 15.08.2008 14:01

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by jbrady (Post 292542)
The woman who we bought our house from (4 years ago for 420K with no ajoining neighbours in Kanton Aargau) bought her house for less than 50K about 25 years before.
Maybe long term you can make some money - for retirement or your kids.
Perhaps you can pay some money each month into a balancing account which would pay off the mortgage when you sell the home -difference between rent and mortgage say.

To be fair, assuming she bought the property outright with 50k and had no mortgage, her return over 25yrs was ~9%. Which is definitely good, but considering over the 25 years from 1979-2004 (you said she sold 4 years ago) the S&P500 returned 13.66%. If she had invested the cash in the S&P, she would have 1.2 million vs 420k (sorry to use US data, its more available!). Also I presume the 420k was net, so drop some kFr for fees and selling expenses...

I know I know, but then she would have no where to live - but the point is housing can be an underperforming asset class with large fees and taxes associated. When making the decision to buy or now you really need to include the return you would get from the extra money you would pay on a mortgage vs rent (admittedly in some cases it might be negative!). Oh and remember that leverage (ie mortgaging) can cut both ways, just visit the states at the moment to see :eek:

renmaris 15.08.2008 14:29

Re: Is it worth it to buy a house in Switzerland?
 
As others have remarked one should carefully distinguish between the emotional and financial benefits of home ownership. What might be a breakeven financial deal could be the key to a happy family life, security for a spouse or children, bedrock support for a marriage etc.

I have bought and sold houses for 30 years and the returns have been very good when considered over a long period of time and provided the right financing was available. Because real estate cycles are impossible to predict the worst situation is being unable to act when a buying or selling opportunity arises because you may have to wait years to find another inflection point in the cycle.

On the point of financing, the US is an unusually advantageous place to buy real estate. Not only is all mortgage interest deductible up to $ 1 million, it is also possible to get a 30 year fixed rate mortgage for up to 80% of the appraised value. So, your mortgage costs are effectively fixed and if you are liable for income tax, you can deduct the interest. This means today that a 30 year loan would cost a middle class income earner about 4.25% p.a. Moreover in absolute terms, most US cities are an bargain. In Los Angeles a 300 sq.m (3,300 sq foot) house can be bought in a desirable middle class neighborhood for $1 mio.

Switzerland is not only an expensive market; it is also a much smaller less dynamic with fewer houses changing hands. While it is true that you might be able to save a considerable amount each month when buying a home versus renting, if you are a foreigner and plan at some point to leave the country you may end up with a hard to sell asset.

But as many people have said the key reason for buying your own place might be the freedom that comes with it. And if that costs you a little bit more then what price happiness

The Swiss market

jbrady 15.08.2008 14:32

Re: Is it worth it to buy a house in Switzerland?
 
As an purely an investment, I 100 percent agree with you.
However, add the bonuses of having lived in your own house mentioned in this thread - especially the monthly difference between renting and the mortgage (in my case it went down from 2200 to just over 1000 per month) and it is not too bad a gamble. Rent payments are gone forever.

The lady I bought my home from actually went into a care home and the daughter got all the money and bought a place in Lanzerote Lucky her;)

esto 15.08.2008 15:32

Re: Is it worth it to buy a house in Switzerland?
 
Thanks to everyone for their feedback :) So far everything I have read confirmed my initial beleif: that as a financial decision, buying is about equal to renting...however the emotional/freedom part is the higher factor ...plus for ~1700chf in mortgage payments I can live in a house versus 1700chf for a 3.5 room apartment renting.

...but with renting I have less worries and more freedom to up and move. So still a split decision. Guess I have to ask myself if I will really spend the next 10-20 years here or not...and if I beleive the Swiss house market will go up or at least remain stable, so I don't lose my initial investment..

Nathu 15.08.2008 18:37

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by Lou (Post 293047)
Ok but do you have a link to this? It is the first time I have heard about such a situation & would be interested in learning more.

What happens to a homeowner if his financial situation gets grim and he recieves social aid money? The municipalities have varying rules but mostly follow the recommendations of the Swiss Conference of Social Welfare, like the city of Zurich.

In Zurich, the social aid money for habitation is limited to 1100 Fr./month for a person +200 Fr. for every additional household member. This limitation comes into effect after a grace period of six months.

If the cost of living in the house exceeds the limit, there are a couple of solutions possible. Sometimes it's possible to rent out a part of the house, or to raise a mortgage on the house. If the cost of the house only slightly exceeds the limit, the person can apply for a special permission.

However if the welfare recipient lives in a rented apartment with a rent that exceeds the limit, there are usually less alternatives to moving to a cheaper habitation.

Social welfare has to be paid back if the financial situation of the recipient improves permanently, but it is not uncommon tat social welfare offices have to wait with their demands until the recipient's inheritance is distributed.

Javo 15.08.2008 18:54

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by peachy (Post 293041)
This is a very valid point.

Boiler breaks? Kiss 5k goodbye.

I agree with peachy. one little thing goes wrong in a house and getting it fixed cost big $$$. i had a $20 chf shower curtain/rod putin and the repair guy racked up the bill to 700 chf. Also once they know you are a foreigner they will take you for a ride.

best not to buy, i dont trust swiss people to do anything cheaply....

esto 15.08.2008 19:51

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by Javo (Post 293581)
putin and the repair guy racked up the bill to 700 chf.

...next time don't have the President of Russia install your curtain rod, and it'll probably be cheaper :rofl:

szhjcn 18.08.2008 08:49

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by Javo (Post 293581)
I agree with peachy. one little thing goes wrong in a house and getting it fixed cost big $$$. i had a $20 chf shower curtain/rod putin and the repair guy racked up the bill to 700 chf. Also once they know you are a foreigner they will take you for a ride.

best not to buy, i dont trust swiss people to do anything cheaply....

Maybe time to learn to do a few jobs like this yourself.

I've saved a fortune by doing many things myself.

18.08.2008 09:19

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by Javo (Post 293581)
I agree with peachy. one little thing goes wrong in a house and getting it fixed cost big $$$. i had a $20 chf shower curtain/rod putin and the repair guy racked up the bill to 700 chf. Also once they know you are a foreigner they will take you for a ride.

best not to buy, i dont trust swiss people to do anything cheaply....

Did you get an estimate first? If not, then you agree to pay "by the job".
There are many things which need to be clarified before you say, "please just fix it".

Materials, time, fuel and travel costs, billing, taxes, etc, etc. I would have to say you got a bad deal on your experience, but it is not fair to pin this soley on "the Swiss".

Anyone who lives here knows the high cost of living. One of the problems is people don't ask for a quote first, have the work done, then complain about the bill. Best ask your questions first and get a proper quote. One thing done well here by professionals is the paper work to ensure all is clear (translations not included).

Be careful who you ask to get the work done. Handymen down the road tend to overcharge since they are under no legal obligations.

Your experience doesn't really include buying a house or renting since this can happen to a caravan owner, rental or owner.

szhjcn 18.08.2008 09:23

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by Javo (Post 293581)
Snip <-- Also once they know you are a foreigner they will take you for a ride.

I think once they know you are clueless on what's involved, they take you for a ride.

Had several builders in the UK wanting to make a lot of money out of me, but I knew enough to avoid this.

So nothing to do with being a foreigner.

markalex 18.08.2008 10:05

Re: Is it worth it to buy a house in Switzerland?
 
I honestly believe that the majority of people here rent because they cannot afford to save up the deposit. Most of us need to live close enough to a city (Zurich, Zug, Geneva, Lausanne, Basel etc) to work, so we have to purchase something reasonably local. Purchasing a house in these parts requires a deposit of hundreds of thousands often.

There are two markets here, flats and houses. Purchasing a flat I give you may not be the best route, buy renting a house is surely madness if you intend to make Switzerland your home.

That said, I would not purchase property that was beyond a reasonable commute to the city here, even if it was very inexpensive, simply because I fear it, your children, their children will find it very difficult to sell.

On a different note, for all those reading this with a few hundred thousand francs in the bank, and no plans to purchase property, tell me what do you plan to do with this money?

18.08.2008 10:06

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by markalex (Post 294719)
for all those reading this with a few hundred thousand francs in the bank, and no plans to purchase property, tell me what do you plan to do with this money?

Some people would call this a "Nest Egg"

AboleynCH 18.08.2008 10:56

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by Enaj (Post 293097)
Sorry, I don't have a link and wouldn't know how to transplant it even if I did (am not very computer literate). If you really want to know I think you should ask at the social services. I found out through neighbours who lost their house and from friends who are social workers.

I know a Swiss single mom (divorced) from my daughter's daycare who was laid off from her job, couldn't find another job after unemployment ran out, so she received social security for awhile while she retrained. Her retired parents were forced to repay the social security, even though she is nearly 40 years old and left home years ago. (the ex-husband is in another country and only sporadically employed)

miniMia 18.08.2008 10:56

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by szhjcn (Post 294658)
Maybe time to learn to do a few jobs like this yourself.

I've saved a fortune by doing many things myself.

Exactly! I tiled the laundry room all by my lonesome!!!! It looks great!! :) I'm not yet thinking of re-tiling the whole bathroom..... but.....

Jim2007 18.08.2008 13:02

Re: Is it worth it to buy a house in Switzerland?
 
Quote:

Originally Posted by markalex (Post 294719)
I honestly believe that the majority of people here rent because they cannot afford to save up the deposit. Most of us need to live close enough to a city (Zurich, Zug, Geneva, Lausanne, Basel etc) to work, so we have to purchase something reasonably local. Purchasing a house in these parts requires a deposit of hundreds of thousands often.

I expect that most people rent because they don't intend be here for the long haul.

Quote:

Originally Posted by markalex (Post 294719)
On a different note, for all those reading this with a few hundred thousand francs in the bank, and no plans to purchase property, tell me what do you plan to do with this money?

Take early retirement - 55 rather than 65

Jim

amogles 18.08.2008 13:25

Re: Is it worth it to buy a house in Switzerland?
 
If you are looking at big cities like Zürich (okay, let's say just Zürich because it's the only place I have experience of that really counts), you'll often find that renting is cheaper than buying by a considerable margin.

The reason is that a non-negligable percentage of housing is owned by housing associations who by statute are not for profit. All income is thus reinvested in improvement, maintenance and replacement of the buildings, or maybe adding new ones.

Although renting privately is more expensive, there is a limit to what the landlords can charge if they want to stay competitive. Hence the overall level of rents stays low.

Once you get out of town, the percentage of privately owned buildings rises. Landlords are still in competition with the housing associations, so cannot charge more than these, but they don't charge much less either, and hence rents do not drop off but stay level over quite a large area.

The Swiss system is set up to encourage occupancy of buildings. Hence the "Eigenmietwert" in which owners have to pay taxes over a pro-forma rent they pay themselves. This is the reason that in Switzerland empty buildings are quite rare, and you don't get speculators buying buildings to let them rot (in the belief that there value will rise anyway) as you do in many other countries. I think this is a very good setup as such dilapidated buildings can devalue whole areas. I know because I once had a property in such a street in the UK and had to sell under value.

My own formula is live in a cheap apartment in town and put your excess money into an out of town weekend property. You can still get them cheaply, but prices are rising.

Tilia 18.08.2008 21:50

Re: Is it worth it to buy a house in Switzerland?
 
When looking at buying property you may want to consider buying an older property and renovate it. If the last renovation was made 20 years ago you can deduct the whole amount from you income. This as long as the renovation sustains value and doesn't increase value.This of course is mainly interesting for those with high income and high marginal tax rate.

buchs 04.12.2008 09:17

to rent or to buy
 
Hi

Any body out there that can offer advice on which is better, I would like to own my own home, getting the deposit together is hard and so many people tell me renting is better and you shell out lots less than if you own your own.

what are the pro's and cons of buying.

thanks

lucy_sg 04.12.2008 09:31

Re: to rent or to buy
 
Welcome to the forum!

You might want to take a look into these threads:

http://www.englishforum.ch/other-gen...itzerland.html

http://www.englishforum.ch/housing-g...itzerland.html


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