8 reasons not to buy a house in Switzerland
05.02.2012 00:15
Swiss bank UBS analysts have prepared a study which suggest that housing in Switzerland at the moment can not be considered a safe haven for capital investments. It is true that disagree with them bankers and real estate professionals from Geneva. It is reported online edition of Switzerland's "Nasha Gazeta".
As states UBS, since 2000 the price of their own apartment in Switzerland have risen by 65%. In Geneva - even at 140%. Especially, as it has not been said in recent years, "overheating" of the market concerns of real estate in major cities and at popular ski stations. Experts call UBS for eight reasons why now is better to refrain from such a large purchase.
1. Features of the market
Real estate accounts for 42% of the state of the Swiss family. In total across the country - it's 1.4 trillion francs. Since 2000, the number of households grew by 40%. This is a major risk factor for the economy as a whole in the event of trouble in the Swiss real estate market households expect bad consequences.
2. Monetary expansion
Lowering the interest rate leads to an increase in liquidity: in recent years could be seen growing demand for real estate and, consequently, prices. This leads to a surge in construction. Since homeowners feel wealthier, increasing their level of consumption. Banks reduce the requirements for borrowers - a growing number of mortgage loans. All three factors have a positive impact on economic growth in the country. But should interest rates begin to rise again, the dynamics takes place at 180 degrees. The more homeowners and mortgage borrowers in the country, the stronger the negative effect of the crisis is having on economic growth.
3. "The effect of the double lever"
In Switzerland, 55% paid for the property owner's personal wealth and 45% of loans taken from the bank. This means that if a homeowner faced with monetary constraints, the negative effects will spread to both sides of their home economy - Personal finance and mortgages. Thus, any crisis in the housing market will lead to a banking crisis.
4. Inefficient property market
At UBS believes that housing should not be considered as a pure investment. When a house is bought for yourself, here are the same principles as for consumer goods. That is, the increase in prices leads to lower demand. But if the apartment becomes a target for their money, all they achieve the opposite - the price is higher, so it is more desirable because it gives the opportunity to gamble. In addition, the emotions come into play. The heart of the investor when dealing with stocks or other investments not beating as strongly as in buying a home. And since the real estate interest in everything, even the rumors in this area exclusively distributed quickly, which again we repeat, makes housing an ideal object for speculation. All these factors lead to high prices.
5. Influence the transaction price
The real estate market, especially in rural areas is very illiquid, since the house changed hands and is extremely rare. Therefore the price of housing goes only upwards. Especially if the previous owner had paid too high a price and wants to "discourage". Since previous price becomes a benchmark for the new - that does not meet the objective reality.
6. Impossibility of a quick sale
At the time, as the stock market bubble of the risk level may be due to fast transactions, sell house quickly is simply impossible.
7. Hidden Costs
Private investors systematically underestimate the real cost of housing. They do not think about the mortgage and the percentage of spending on home maintenance. Meanwhile, the money could pay dividends, being invested in an enterprise.
8. The myth of the shortage of land
The idea that land for development is too small, has already resulted in California in 1880-1887 years to the appearance of "bubble" in real estate. In 1888, he snapped. For comparison, in the period in California, there were 860 000 inhabitants, and in 2010 - 37 million people! In a small Swiss talks about the lack of places to go to the 1990s, but such measures as building "up" and a more economical distribution of territory necessarily will bear fruit.
But not all that bad
From this analysis do not agree on the real estate professionals in the city, where prices are increased the most from the Swiss - in Geneva.
"2012 will undoubtedly be more complex and demanding," - commented to the newspaper Tribune de Genve Baniu Claude, a member of the General Directorate Cantonal Bank of Geneva. But, in his opinion, the Geneva real estate market is protected by many factors. Start with the fact that demand far exceeds supply. In Geneva, the level of available housing is 0.25%. In addition, 100% of new apartments were built in areas that are controlled by the government of Geneva, set prices for rental and sale.
As states Cantonal Bank of Vaud, "the predominance of loans with fixed interest rates are inherently protects the customer from severe changes, such as the rapid increase in interest rates."
The Geneva Chamber of Real Estate (CGI), Christophe stack does not agree with the analysis of UBS: "If you carefully read the study, which the bank held the property market, it is not as bleak as the tone used by the authors, giving comments in the press."
www.zagorodna.com
As states UBS, since 2000 the price of their own apartment in Switzerland have risen by 65%. In Geneva - even at 140%. Especially, as it has not been said in recent years, "overheating" of the market concerns of real estate in major cities and at popular ski stations. Experts call UBS for eight reasons why now is better to refrain from such a large purchase.
1. Features of the market
Real estate accounts for 42% of the state of the Swiss family. In total across the country - it's 1.4 trillion francs. Since 2000, the number of households grew by 40%. This is a major risk factor for the economy as a whole in the event of trouble in the Swiss real estate market households expect bad consequences.
2. Monetary expansion
Lowering the interest rate leads to an increase in liquidity: in recent years could be seen growing demand for real estate and, consequently, prices. This leads to a surge in construction. Since homeowners feel wealthier, increasing their level of consumption. Banks reduce the requirements for borrowers - a growing number of mortgage loans. All three factors have a positive impact on economic growth in the country. But should interest rates begin to rise again, the dynamics takes place at 180 degrees. The more homeowners and mortgage borrowers in the country, the stronger the negative effect of the crisis is having on economic growth.
3. "The effect of the double lever"
In Switzerland, 55% paid for the property owner's personal wealth and 45% of loans taken from the bank. This means that if a homeowner faced with monetary constraints, the negative effects will spread to both sides of their home economy - Personal finance and mortgages. Thus, any crisis in the housing market will lead to a banking crisis.
4. Inefficient property market
At UBS believes that housing should not be considered as a pure investment. When a house is bought for yourself, here are the same principles as for consumer goods. That is, the increase in prices leads to lower demand. But if the apartment becomes a target for their money, all they achieve the opposite - the price is higher, so it is more desirable because it gives the opportunity to gamble. In addition, the emotions come into play. The heart of the investor when dealing with stocks or other investments not beating as strongly as in buying a home. And since the real estate interest in everything, even the rumors in this area exclusively distributed quickly, which again we repeat, makes housing an ideal object for speculation. All these factors lead to high prices.
5. Influence the transaction price
The real estate market, especially in rural areas is very illiquid, since the house changed hands and is extremely rare. Therefore the price of housing goes only upwards. Especially if the previous owner had paid too high a price and wants to "discourage". Since previous price becomes a benchmark for the new - that does not meet the objective reality.
6. Impossibility of a quick sale
At the time, as the stock market bubble of the risk level may be due to fast transactions, sell house quickly is simply impossible.
7. Hidden Costs
Private investors systematically underestimate the real cost of housing. They do not think about the mortgage and the percentage of spending on home maintenance. Meanwhile, the money could pay dividends, being invested in an enterprise.
8. The myth of the shortage of land
The idea that land for development is too small, has already resulted in California in 1880-1887 years to the appearance of "bubble" in real estate. In 1888, he snapped. For comparison, in the period in California, there were 860 000 inhabitants, and in 2010 - 37 million people! In a small Swiss talks about the lack of places to go to the 1990s, but such measures as building "up" and a more economical distribution of territory necessarily will bear fruit.
But not all that bad
From this analysis do not agree on the real estate professionals in the city, where prices are increased the most from the Swiss - in Geneva.
"2012 will undoubtedly be more complex and demanding," - commented to the newspaper Tribune de Genve Baniu Claude, a member of the General Directorate Cantonal Bank of Geneva. But, in his opinion, the Geneva real estate market is protected by many factors. Start with the fact that demand far exceeds supply. In Geneva, the level of available housing is 0.25%. In addition, 100% of new apartments were built in areas that are controlled by the government of Geneva, set prices for rental and sale.
As states Cantonal Bank of Vaud, "the predominance of loans with fixed interest rates are inherently protects the customer from severe changes, such as the rapid increase in interest rates."
The Geneva Chamber of Real Estate (CGI), Christophe stack does not agree with the analysis of UBS: "If you carefully read the study, which the bank held the property market, it is not as bleak as the tone used by the authors, giving comments in the press."
www.zagorodna.com
Content tags:
Overseas property
Your comment:
Your opinion be first
Read also:
