Thanks guys, I mentioned these exact points somewhere in this forum already. I also think that due to home office and autonomous cars remote locations will become more attractive. Yes, traffic jams could be a problem, but that’s where the boring company steps in with the tunnels
Yes, for sure! People who love to live in Zurich will not move out. But people, who don’t need instant access to these services, will consider. I see two possible groups that could be interested:
elderly/retired: you enjoy peace and quiet, but you don’t want to rely on your driving skills, because you don’t know how long you will be able to drive by yourself (bad eyesight, reaction time etc).
office workers: you value your time, that’s why you lived close to your office in the center of a big city. but now the car drives itself and you can make phone calls or check the laptop on the way from/to work, so now you can live in a house outside the city and commute + use home office.
I want to stress: the effect will probably be small and will take many years to become noticeable.
Bojack : from the elderly perspective, there is still a need of doctors, supermarkets etc.
In the Video they speak about the example in France, and it happens that my grandfather lives in this kind of left-behind region,
Means :
15 km to the next small town
at least 50 km for the next Hospital, doctors are closer, but not much
10 km for the next Supermarket.
So the Problem is a lot of car usage (meaning Energy, btw some Researchers are “afraid” of the effect of autonomous driving will have that people will accept even longer ways to get to work)
Anyway, main point of the Video is that RE is a risky business, since a lot of need will simply disappear from the market.
I watched the video. It’s a bit long for the content it conveys, but nevertheless it was nice to watch. The guest is a calm guy, who is not quick to call doomsday scenarios, but looks at science.
What my take from his video is: places with cheaper price will see even cheaper prices, as young people move out and old people die out. For urban centres it’s hard to predict. These are the places, where prices are blown to the extreme. But that’s where people find jobs and services.
Maybe teleworking + autonomous vehicles will save these remote areas from total desertion. At some point, you don’t want to live in a small flat in a high rise building, when you could have a house with a garden for the same price.
I’m wondering if the regional disparity could ever grow incredibly large in Switzerland. Switzerland is much denser and much better connected than almost any country in the world.
In the US “moving close to work” can mean reducing your commute time to 1h. If swiss workers accepted a 1h commute, this would cover almost all of Switzerland. Doesn’t this imply that a huge drop of housing prices in certain regions is unlikely?
Also, the remote places in Switzerland are often the picturesque ones. In the mountains, or close to them. What’s plan B for cantons like Graubünden, becoming retirement destination for the rich?
you can clearly see the difference between 2019 (red line) and 2050 (fat chart). there will be an huge gap in the age where people buy family home (30-50 years old) and a hugh surplus of older people that would need smaller apartments/altersheim.
I wonder how that would play out. But people born in 2015 will have an huge choice of family homes/flat 5+ rooms that older people will be leaving. So my daughter basically
Sometime I wonder if a good foundation in stock investing in public schools would be the best way to fix real estate prices in ch.
I’m Swiss with a Swiss wife, coming from old Swiss families.
The amount of ignorance I see in Swiss people on investing topics is staggering. The real estate prices increase are definitely not because of immigrants, but is driven mainly because people think is the only investment vehicle in existence.
Concepts such as opportunity cost or risk vs return are gibberish to them. It’s like I’m speaking some Tolkien made-up language, the way they look at me.
Right now I’m considered the black sheep, the most insane people in my family because I invest in the stock market and refuse to buy property to live with my family. They all think we will be bankrupt by the time we retire at 70 or something.
We really need to improve investingeducation of the general population
Altersheim: maybe. But how many older people, who already raised kids, move out of the big house they lived in for decades? In the video posted above by @Patirou the economist mentions that many houses in Germany, including München, are occupied by 1-2 persons. The kids left, one of the spouses died, but they still don’t move out (don’t replant an old tree?). So these people occupy a big space that could easily fit a family of 4. When they eventually move out or die, they will free up a lot of living space.
If you think this about the Swiss, then what will you think about all other countries? Switzerland has the lowest home ownership rate with only 43%. Maybe this is caused by high prices, but the same applies to Germany (52%) and Austria (55%). These countries are generally regarded as renters, who put a lot of their money into alternative investments (stocks, bonds).
Compare this with Poland (84%) or Romania (96%). In Poland it’s a no-brainer. If you are creditworthy, you get a mortgage. Renting is regarded as burning money or paying off other man’s mortgage.
I truly regret that many tax systems encourage the purchase of real estate. You can deduct your interest, use your retirement money for the purchase. It’s almost a bad idea not to buy a flat. But it shouldn’t be.
well if you live in the RE you bought you get the added fake rent that more or less balance the interest deduction out.
I thing the most “market disturbing” effect is that landlords can write empty rooms off - even home owners. if you live in a big house and only use one room and 3 others are completely empty and “sealed” you can virtually reduce the size of your house for tax purposes.
That means that landlords or real estate conglomerate are not motivated to lower rent to ensure their RE is actually renting out. They are “happy” to keep rent highish and deduct empty rooms as losses.
If you reverse the system and penalize tax-wise even further empty flat/houses, rent would decrease and people would move from ownership to rent and would limit new constructions. We have a lot of empty flats right now.
Is not a perfect idea and would have limits. But there is something lacking - Landlords are not competing with one another (reducing rents) to attract tenants. They are “happy” having empty apartments because the losses is subsided through tax deductions.
I would say pension funds play a big part in the real estate prices too. They invest conservatively, mainly in bonds and real estate. With low (negative) bonds yields, they have relied more on real estate. The way I understand it, they can’t really afford to have their real estate assets reassessed and their paper price drop, so they need to keep it high, hence why we can see empty new buildings for sale/rent without price adjustment.
Then again, many people don’t realize what it means to be a homeowner. I’m working in a construction office for a small Gemeinde, people often call to ask that the Gemeinde takes care of things that are part of their responsibilities and when we tell them that, it often appears that they built with only the bare minimum amount of money available and can’t handle the expenses tied to the stability of their land / the state of their private sewers/roads / the consequences of the conflicts with their neighbors etc.
I also prefer the Swiss system, but I do see why states would do that.
owning your primary residence is a huge hedge against economical changes at a time when you’re out of the workforce, this is important as housing is one of the biggest expense (if you’re still working you shouldn’t care too much about cost of housing increasing as over time salaries should somewhat follow)
forced savings: the state of financial education really isn’t great, primary residence ownership is the main way people build wealth (they don’t realize it, but switching from renting to paying out a mortgage is a forced saving, for some reason it’s equivalent to living a smaller place and saving/investing the difference but it’s much harder to encourage people to do that)
Yes, I see the point. However, you could say that:
If the entire wealth of a huge chunk of the population consists of real estate that lies within the borders of their country, then that is some really undiversified national wealth. Our local companies need capital, but nah, I’d rather invest in my own flat, because of the tax write-offs.
When people buy their homes at an inflated price and then pay off the mortgage for 30 years, possibly paying double the original price, then home ownership looks more like a burden. Many people in Poland took mortgage loans in CHF, then PLN lost in value and after a few years of paying interest their LTV was still over 100%.
Thos examples are poor by not being prepared and educated to those topics and not that buying real estate are bad. It would be like somebody here writes that he/she is invested only in call options to reach FIRE and than blame FIRE that it doesn’t work.
Oh, yes. The point I was answering to was that we needed more financial education in Switzerland, to which I agree. My example is also totally biased because I only deal with people who have problems with their property, so I don’t have real feedback from the probably majority of people who handle their real estate investments properly.
ETA: On the financial education topic: my feeling on it is that we make real estate investments sound way more easy than they really are. In many people’s view, it is just a choice between paying rent or interests on a mortgage, and the mortgage is often cheaper. This is also probably a way to boost the economy by having the construction sector more active, as well as by creating asset backed debt which helps banks and insurances, hence the tax advantages, as I understand it. Without them and the ability to use our second pillar to invest in own homeownership, access to homeownership would be severely more difficult, which would not necessarily be a bad thing but would probably result in a different economy than the one we have now.
Yeah, you missed the point. @nabalzbhf said that mortgage helps you to save money, so it’s a good investment for people with low investing knowledge. So I gave an example of how bad it can end. Also, in Poland the bank employees were shamelessly advertising these CHF loans as cheaper, either ignoring or not understanding the risk themselves.
It’s always easy to rate the risk post-factum, back then nobody imagine that 1 CHF will go from costing 2 PLN to 4.
These Polish examples are not a very meaningful example or (counter)point regarding mortgages per se, and their risks thereof. They are rather a good example for the risks associated with in foreign currency.
Taking out a big longer-term loan, worth (probably) more than one‘s own net worth in foreign currency, while earning one’s income in domestic currency, is a huge speculative bet. Even if it might not have been „sold“ as such.
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