Real Estate in Switzerland, 2023

Thank you @Wolverine for providing me with valuable information. Your insights have helped me make an informed decision regarding my mortgage options.

I just tried the calculator and it’s basically telling me to know but unless the mortgage interest rate is less than 1% which I believe is not easy at all to have nowadays.

Hopefully this is not too off topic (wanted to avoid opening a separate 3d), but does anyone have any experience renting through housing cooperatives (maybe in the suisse romande area)?

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I kind of always thought that interest rates (swaps) are moving relatively slow, but going down by 0.4% in 2 months is impressive.

By the way I would be glad to get some convenient source of CHF market swap rates. I have seen something on investing.com, but it doesn’t look convenient to me.

Yeah now it’s possible to get 2% for 5 years again.

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Lots have been said about SARON margin, but I haven’t seen much about the margin for fixed term mortgages. Before I start digging and analyze data myself, maybe you know:

What is an excellent margin vs. interbank swap rates for a fixed term mortgage?

I guestimated 0.5% as a minimum bank’s margin.

Do people calculate this kind of things?

Does it make sense at all (e.g. rates fluctuate too much for this parameter to be meaningful)?

From personal experience: 0.60% margin on the swap rate is excellent. But this only really works if the swap rates are >0.50% in the first place. So you couldn’t work with it from 2011-2022.

Currently also curious about this, can a net deficit in rent - (interest + ammortizaton + maintenance) really be covered by this difference times 3 in salary? Is this actually done this way by banks?

Yes it‘s how most banks operate. Can‘t tell if all do it this way, but they should.

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Recent news on Real Estate in Switzerland:

  1. Federal reference rate for rent increases applicable to existing rental contracts went up today from 1.5% to to 1.75%. Owners are authorised to apply an additional 3% rent increase on applicable leases

  2. Raiffeisen’s recent Etude actuelle immobilier suisse 4T 2023 reports 4% increase vs. prior year for new rental contracts.

  3. For 2024 Raiffeisen forecast “soft landing” in purchase prices and continued increases in proposed rents due to shortage of supply. Regards the federal reference rate for rent increases on existing rentals - they expect it go up again but only in 2 years’ time at end of 2025

I believe rents make up ~20-25% of the CPI index. I can’t figure out how this is going to play out - is there a risk of a vicious cycle of increasing rents, increasing inflation, increasing interest rates (to counter inflation), increasing rents etc?

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I watched the last press conference of the SNB, this question also came up there. According to the SNB, they incorporate that into their inflation forecasts / simulations and their decision for the interest rate. So I think if inflation without rents is below 2%, they will not continue to hike rates.

Interesting update from ZKB about Zurich: https://www.zkb.ch/de/blog/immobilien/immobilienbarometerq42023.html

I have a general question about condos: if there are three equal size apartments in a building, does it mean each owner also owns 1/3 of the land of that property? Who owns the backyard? I asked and it’s not associated with the ground floor apartment.

Not a lawyer nor a realtor but in my experience, special arrangements can be made (linking a parking spot or a garden to one specific appartment). They should be written in the land registry (simple extracts won’t hold the details of it so you would have to ask for the specific document settling that part of the property if you want them) and potentially (I’m close to say “normally”) the “co-ownership regulations” (probably not the proper legal term).

Before the registering is actually done (while it’s in construction), you’d have to trust the seller and get in written form any specific advantage your appartment should have.

If no specific arrangements have been taken, then the share of the co-ownership linked with the appartment and written in the land registry should represent a share of the ownage of the common grounds, which should mean that you have access to all, while also not being able to prevent others from using them.

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How about in 50 years, if we are discussing selling/demolishing the property, would my stake be 1/3 (if no special arrangements were made)?

Yes you own part of the land, this should be written in the Grundbuchauszug, Depending on size you should have a bigger or smaller part of the land, even if the groundfloor apartment is using the garden it does not mean he “owns” it fully.

As for the garden, I believe it’s even requested by law for condos. There can be arrangements for exclusive usage, though.

Raiffeisen’s bread and butter is mortgage lending so I read whatever they say about the property market with scepticism. Nevertheless there is always something revealing in their quarterly analysis

My takeaways from their Q1 2024 study (de/fr/it) :

  1. SNB reference rate for indexing existing rents is not forecast to increase anymore.

    Good news for tenants who don’t plan to move.

    They continue to forecast strong upwards pressure on new rents. Net immigration in 2023 was a record 100k

  2. They forecast “owning will soon become cheaper than renting again” due to rents increasing and in addition because interest rates have come down from their peak.

    “Owning is cheaper” analyses from mortgage banks and brokers ignore opportunity cost and in my opinion should not be allowed without big disclaimers. However the reality is that most of society don’t know or don’t want to know about this so their comments give good insight

I am very happy we are renting a property that meets our needs and we don’t have any desire to leave. I hope we can stay here.

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