For many Swiss people, owning their own home is a lifelong dream. However, property market prices are relatively high and banks are imposing stricter rules on mortgages than before. Do you want to buy property now? The following applies: First do the math and save, then buy!
Is it one of your fundamental lifelong dreams “to buy property”? Lots of people have this dream from as young as 20 or 25. Others prefer to wait before venturing on to the property ladder. However, the economic climate has changed in recent years. In many places, property prices have risen dramatically. Previously, an average home would cost around 600,000 Swiss francs. A required deposit of 20 percent meant that savings of 120,000 Swiss francs used to be enough to fulfill your dreams of getting on the property ladder.
Buying property: more money in your own pocket
Prices in well-to-do locations more than anywhere have skyrocketed in the last ten years. In the Zürich area, around Lake Geneva and in other particularly popular regions, owning your own flat or house will easily set you back upwards of 1 to 1.5 million Swiss francs. Sometimes the cost is even higher: These days, owning a house with three or more bedrooms in the Zürich area will set you back in the region of at least 1.5 million Swiss francs. The size of the deposit needed for such a purchase has climbed to a whopping 300,000 Swiss francs – in some cases double what it used to be.
Anyone dreaming of owning their own home who wishes to raise money, should first choose between these two different options:
Option 1: You want to own property relatively soon, e.g. within the next one to two years.
Option 2: Your ambitions are more long term and you want to save money at a young age in order to be able to fulfill your dreams on getting on the property ladder later in life.
Let’s analyze Option 1 first of all: A period of one or two years is too short, for example, to generate any income from stocks or other securities. That would require a longer term investment horizon. If you still want to buy property relatively quickly, you need to consider other sources of income: Could you utilize your pension fund or pillar 3a, for example? Furthermore, advance inheritance payments or gifts within the family are popular and definitely viable options.