Productivity has nothing to do with the real estate. There are more people on earth and, I don’t have numbers at hand, but from what I remember, the lodging area occupied per person keeps increasing and increasing.
(Did we have this discussion few years ago already?).
Even during the last 50 years or so; in 19th - early 20th century it was rather common in cities that a multigenerational family would occupy one room. So we can say that unlike all other resources, living space is getting less and less available. So you shouldn’t be surprised that our Lord the Market makes it expensive!
Of course there are areas with a huge demand and those with a moderate one. Even in Switzerland, you can buy or rent lodging at very affordable prices in small villages of Canton Jura. But that’s not what you are looking at.
Fair point, I just couldn’t help myself I won’t mention it again.
Correct me if I’m wrong, but is it not fair to look at the price of real estate in the place where you live and work? What good is a flat in Jura if you work in Zurich? A couple living in Zurich, each earning 120k (240k in total), could afford a mortgage of 1m. They would probably need to get married first, or just trust each other enough to go into a business deal of their lifetime together. Being good earners, they could pull their pension money and savings and collect 500k. So they could afford a 1.5m flat in Zurich. Last I checked, this is barely enough to afford anything nice. If they were looking for a house for that money within the boundaries of canton Zurich, they would be choosing from scraps. I just find it a frustrating reality and I wonder if there is a way out.
YES. And I explicitly asked not to write anything more about it. I don’t want to have to clean up this thread. Just please let’s focus on real estate.
Do say more! I was not happy about that merger deal betwen CS and UBS. Just creating a bigger problem, kicking the can down the road. Is UBS big in mortgage business? I always thought the biggest players are SwissLife, maybe Raiffeisen?
It also made me thinking about long-term effects for this on Switzerland. Not to be off-topic - I think Switzerland can lose a lot of its “charm” as regards banking safe heaven etc., which may affect high-earners/wealthy people immigration, which finally may affect housing market, amongst other things. Hopefully I’m too pessimistic here, as CHF doesn’t seem to be particularly weak after what happened…
What we saw last week was that once a run starts there is no stopping it even if depositor’s initial fears were not rational
Even if it not the biggest mortgage lender any noise about UBS’ Balance Sheet seems something to avoid at all costs right now. UBS is twice the size of the Swiss economy and maybe too big to be saved (does anyone really know yet?)
When I arrived in Switzerland 7 years ago, there were 8 million inhabitants in Switzerland.
Now we are closing 9 million inhabitants.
So that’s an increase of 12.5% of the population in 7 years, or roughly a million person. As immigration is work-based, those are usually qualified people, coming mainly to the big cities: Zurich, Geneva, Basel, etc.
Given the current state of Europe, I don’t think this trend is going to reverse soon. And I don’t think either that housing supply is going to catch up any time soon. Yes they are building a lot of housing (have you see the evolution of Manegg in Zurich over the last five years?), but I’d be surprised if that’s enough.
If that’s really the case, I don’t think that any rate move from the SNB will really change housing prices because the main driver will be a lack of supply.
I have already seen this movie play out before in Paris where there are similar dynamics (that’s where most of the qualified jobs are, there is a lack of housing supply, etc), and I saw the outcome:
building prices went up and up: only the really rich can buy something in Paris (keep in mind that housing prices are somewhat similar with Zurich, but salaries are 2.5x lower)
people are economically forced to either settle for a tiny surface (I doubt this will happen here, i think there is even a legal minimum surface per inhabitant), or to find an apartment/house farther and farther from the capital. What the ECB did in the last 25 years was completely irrelevant to the local situation.
So if I interpret this right, then there are no signs why the trend should reverse. So the people who thought in 2020 that stuff was too expensive and they’d rather just wait, 3 years later got hit with a double hammer: prices have gone up by 20% and that mortgage is not going to cost you 1%, now it’s going to be 3%.
I guess the solution is to work, work, work then save, save, save, and get out of here as soon as possible, if we want to have great living conditions.
I have already seen this movie play out before in Paris where there are similar dynamics (that’s where most of the qualified jobs are, there is a lack of housing supply, etc)
This is beside the core discussion but I would argue that Zurich and Paris hardly compare.
France is a lot more centralized than Switzerland
The Parisian real estate market is a lot more liquid since buying/selling your résidence principale is so much more common/expected once you’re in your late 20s - early 30s (my experience working alongside French colleagues who were earning decent salaries but also far from “rich”)
In fact this is what we did. Moved into CH in 2011 and then working + saving. Not crazily, we were living nicely, travelling etc., but still managed to save enough. When buying in 2021 I had very uncomfortable feeling of buying at the top, but it seems it was not the case. Of course it doesn’t mean that the prices will not go lower at some point, but so far we don’t regret our decision at all. What we regret a bit:
I was not investing the money during those years, as obviously for me it was too short-term + I didn’t have enough knowledge etc. In hindsight - we would have of course much powder to put when the time came.
We took over the mortgage (4 tranches) of the previous owner. Immediate gain of CHF 39000 on house price (plus more or less 4.5% of those amount in addition considering all the taxes paid on top of this price etc.). For the part we had to take and blocked for 10 years we got 1.11%. Now those tranches are going to expire in few months (starting in November over half a year period). On Monday we were contacted by the bank who told us that due to CS events rates went sharply down so it may be a good idea to block them - eg. we got 2.12% for 4 years. The rates went back after, but we still have the possibility to get that deal, I will think about it over the weekend… If that rate would stay until 10 years after we bought the house, we would be around 14k worse than paying the full sum and blocking whole mortgage at 1.11% for the whole period. So not tragic (but of course we don’t know what will be the rates in 4 years if I decide to block now). I’m a bit leaning forward to blocking the rates, to get peace of mind - treat it as kind of insurance. Plus - until 5 years after buying we are a bit more vulnerable to refinancing problems, as we used pension fund assets. In 2026 we will be in better shape, as we should be able again to use those assets in case of interest rates craziness etc.
Well, the key point in my post was about eventually moving out, leaving Zurich (or other expensive city where your work is). Go to Ticino or Croatia or somewhere else, where you can afford a house for a fraction of what you pay here for a flat. Retire or focus on remote work.
What really puts me off about investing in real estate is that either this huge mortgage is always in the back of your head, or you gradually pay it off and eventually you’re left with having 100% of your wealth concentrated in 1 piece of real estate. That’s a crappy diversification. I would be happy to put, say, 1/3 of my wealth in a house, but I’m not going to be worth 6 million any time soon, I guess.
I would appreciate if you would stop trolling/shitposting. I’m sure you’re smart enough to understand my post, so why twist it like that, and that’s already a second time.
But in case it’s not clear: yes, Switzerland offers great quality of life, but I am explicitly speaking about the real estate situation. And about the bang for your buck. If you had a budget of a few million $, would you spend it all on a house in Switzerland, or maybe you would look for something in Spain/Croatia etc and spend the rest of that money on other things? I guess at some level of wealth it doesn’t matter, because you won’t be able to spend it all anyway.
I am starting to see interesting houses to fix in Valais/Wallis, at the lower range of prices. I would guess those kinds of goods would be the first to appear on the market, or have their price somewhat cut, as the people owning/inheriting them contemplate the costs of renovation+taxes/insurance and/or mortgage they’re paying on them without being able to live there/rent them.
We’re not yet at what I’d call a sweet spot, the houses I see are either too expensive, not located in a potentially attractive spot and/or too far gone but we might be getting there.
Woah that escalated quickly! I am not trolling you, sorry if you feel like that. I am just reasoning over the fact that there is indeed a reason many (wealthy and educated) people want to move here, contributing to the RE price problem you personally care about.
Yes of course. But we’re dealing with some kind of a paradox. It’s one of the most desirable places to live with one of the highest salaries, but many people still cannot afford their dream home. I have many friends back in Poland who are earning much less, but they can afford a house.
I guess this predicament can also be seen in Silicon Valley, maybe even more acutely than here.
You get a lot of great things here, but you give up the dream of owning a piece of land. I wonder if there is a way out of this. I like to live here, but I don’t want to put 100% (or more) of my wealth into real estate.