people are leveraged and mortgaged to their ears on near-zero interests, which is due to change next interest cycle → people will start going bankrupt, the rocket-like property prices in the region will need to fall eventually (where people will need to refinance for a worse mortgage on a property that is worth much less)
local currencies can’t be weakened for the energy prices, can’t be strengthened as then wages and export value would drop
setting an artificial ceiling on utility costs (e.g. Hungary) is not sustainable and will break and exile market participants who have been somewhat-effectively running the energy business so far (instead of the government companies who are traditionally useless in running market-based operations)
They’re trapped in the current and other than following the hikes, can’t really do anything (maybe doing less cleptocracy and more transparency in politics would be something?).
PL 1.25% (up from 0.1%)
HU 1.8% (up from 0.9%)
CZ 2.75% (up from 0.3%)
If people and businesses go bankrupt in E-EU, businesses will suffer in W-Eu for all the near-shored manufacturing, IT and callcentering business there.
I’m waiting for our naturalization (and buying property afterwards). It’s going to be interesting to see the wave crash into CH (if it does).
Interesting, NZZ effectively takes the stance that banks should be even more restrictive with giving out mortages, due to the fact that RE will make up a large percentage of the lenders net worth’s, therefore leading to risk concentration.
I personally believe that the middle class who aspire to own RE are pretty f*cked. It only works if you are a double income couple, and/or you have inheritance money at your disposal AND you actually find a property which is on sale (which in itself is no easy feat). If you manage to do all that, you might be significantly better off than renters (see rent vs. buy discussions).
I don’t want to argue about the rent vs. buy discussion and potential financial impact it may have, but the fact is that still a lot of people want to own RE for its intangible benefits, myself included.
while I don’t disagree that there is a strong emotional impact (“owning where you live”), owning an home is much more probable to lead to increase stress, not joy. Was a statistic in one of the video above.
It is. In Switzerland, real estate price increases faster than the salaries. The middle class cant afford to buy a property anymore (Swiss median salary in 2018 was CHF 6’500 gross). Moving away from cities is a short term solution. Prices will go up too.
Each year, you need more savings for the down payment and a higher salary to respect the affordability criteria.
With your example, no bank will borrow money to our couple, unless they increase their down payment to a crazy amount they couldn’t afford without a donation/inheritance.
sorry, the average 85k I mentioned was about taxable income with 2 kids, their actual income will be the 150k you mentioned.
but again, if both of them would make 120k (together 240k, taxable about 160k with 2 kids), it doesn’t really make a difference. Maybe, just maybe, they can afford to buy something new, but that also means cashing out probably everything else they have gathered/accumulated so far and going in with all their capital into a single property. That’s a recipe for disaster.
Thanks for the information. I went on the SNB’s website and couldn’t find yield data going further than 2021.
Do you know of any way to look what the yield on 10 year bonds from the Confederacy were in 2018? The price of bonds was lower, any chance the yields would also have been positive then?
Edit: Nevermind, I’ve found it (yields at issuance, so not encompassing the secondary market but that’s close enough for me). Yields were slightly positive during most of 2018: https://data.snb.ch/en/topics/ziredev#!/chart/rendeidglfzch
What do you think would be the best strategy if you had to conclude a loan in the next days/weeks (my case) ?
I know that Saron gave the best outcomes during the past years and was thinking to go for that solution or for a short term fix rate but with the current incertainties would it make sense to fix the rate for the next 5-10 years (or more)? I’d love to hear your thoughts on this.
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