As others have remarked one should carefully distinguish between the emotional and financial benefits of home ownership. What might be a breakeven financial deal could be the key to a happy family life, security for a spouse or children, bedrock support for a marriage etc.
I have bought and sold houses for 30 years and the returns have been very good when considered over a long period of time and provided the right financing was available. Because real estate cycles are impossible to predict the worst situation is being unable to act when a buying or selling opportunity arises because you may have to wait years to find another inflection point in the cycle.
On the point of financing, the US is an unusually advantageous place to buy real estate. Not only is all mortgage interest deductible up to $ 1 million, it is also possible to get a 30 year fixed rate mortgage for up to 80% of the appraised value. So, your mortgage costs are effectively fixed and if you are liable for income tax, you can deduct the interest. This means today that a 30 year loan would cost a middle class income earner about 4.25% p.a. Moreover in absolute terms, most US cities are an bargain. In Los Angeles a 300 sq.m (3,300 sq foot) house can be bought in a desirable middle class neighborhood for $1 mio.
Switzerland is not only an expensive market; it is also a much smaller less dynamic with fewer houses changing hands. While it is true that you might be able to save a considerable amount each month when buying a home versus renting, if you are a foreigner and plan at some point to leave the country you may end up with a hard to sell asset.
But as many people have said the key reason for buying your own place might be the freedom that comes with it. And if that costs you a little bit more then what price happiness
As an purely an investment, I 100 percent agree with you.
However, add the bonuses of having lived in your own house mentioned in this thread - especially the monthly difference between renting and the mortgage (in my case it went down from 2200 to just over 1000 per month) and it is not too bad a gamble. Rent payments are gone forever.
The lady I bought my home from actually went into a care home and the daughter got all the money and bought a place in Lanzerote Lucky her
Thanks to everyone for their feedback So far everything I have read confirmed my initial beleif: that as a financial decision, buying is about equal to renting...however the emotional/freedom part is the higher factor ...plus for ~1700chf in mortgage payments I can live in a house versus 1700chf for a 3.5 room apartment renting.
...but with renting I have less worries and more freedom to up and move. So still a split decision. Guess I have to ask myself if I will really spend the next 10-20 years here or not...and if I beleive the Swiss house market will go up or at least remain stable, so I don't lose my initial investment..
What happens to a homeowner if his financial situation gets grim and he recieves social aid money? The municipalities have varying rules but mostly follow the recommendations of the Swiss Conference of Social Welfare, like the city of Zurich.
In Zurich, the social aid money for habitation is limited to 1100 Fr./month for a person +200 Fr. for every additional household member. This limitation comes into effect after a grace period of six months.
If the cost of living in the house exceeds the limit, there are a couple of solutions possible. Sometimes it's possible to rent out a part of the house, or to raise a mortgage on the house. If the cost of the house only slightly exceeds the limit, the person can apply for a special permission.
However if the welfare recipient lives in a rented apartment with a rent that exceeds the limit, there are usually less alternatives to moving to a cheaper habitation.
Social welfare has to be paid back if the financial situation of the recipient improves permanently, but it is not uncommon tat social welfare offices have to wait with their demands until the recipient's inheritance is distributed.
I agree with peachy. one little thing goes wrong in a house and getting it fixed cost big $$$. i had a $20 chf shower curtain/rod putin and the repair guy racked up the bill to 700 chf. Also once they know you are a foreigner they will take you for a ride.
best not to buy, i dont trust swiss people to do anything cheaply....
Did you get an estimate first? If not, then you agree to pay "by the job".
There are many things which need to be clarified before you say, "please just fix it".
Materials, time, fuel and travel costs, billing, taxes, etc, etc. I would have to say you got a bad deal on your experience, but it is not fair to pin this soley on "the Swiss".
Anyone who lives here knows the high cost of living. One of the problems is people don't ask for a quote first, have the work done, then complain about the bill. Best ask your questions first and get a proper quote. One thing done well here by professionals is the paper work to ensure all is clear (translations not included).
Be careful who you ask to get the work done. Handymen down the road tend to overcharge since they are under no legal obligations.
Your experience doesn't really include buying a house or renting since this can happen to a caravan owner, rental or owner.
I honestly believe that the majority of people here rent because they cannot afford to save up the deposit. Most of us need to live close enough to a city (Zurich, Zug, Geneva, Lausanne, Basel etc) to work, so we have to purchase something reasonably local. Purchasing a house in these parts requires a deposit of hundreds of thousands often.
There are two markets here, flats and houses. Purchasing a flat I give you may not be the best route, buy renting a house is surely madness if you intend to make Switzerland your home.
That said, I would not purchase property that was beyond a reasonable commute to the city here, even if it was very inexpensive, simply because I fear it, your children, their children will find it very difficult to sell.
On a different note, for all those reading this with a few hundred thousand francs in the bank, and no plans to purchase property, tell me what do you plan to do with this money?
I know a Swiss single mom (divorced) from my daughter's daycare who was laid off from her job, couldn't find another job after unemployment ran out, so she received social security for awhile while she retrained. Her retired parents were forced to repay the social security, even though she is nearly 40 years old and left home years ago. (the ex-husband is in another country and only sporadically employed)
If you are looking at big cities like Zürich (okay, let's say just Zürich because it's the only place I have experience of that really counts), you'll often find that renting is cheaper than buying by a considerable margin.
The reason is that a non-negligable percentage of housing is owned by housing associations who by statute are not for profit. All income is thus reinvested in improvement, maintenance and replacement of the buildings, or maybe adding new ones.
Although renting privately is more expensive, there is a limit to what the landlords can charge if they want to stay competitive. Hence the overall level of rents stays low.
Once you get out of town, the percentage of privately owned buildings rises. Landlords are still in competition with the housing associations, so cannot charge more than these, but they don't charge much less either, and hence rents do not drop off but stay level over quite a large area.
The Swiss system is set up to encourage occupancy of buildings. Hence the "Eigenmietwert" in which owners have to pay taxes over a pro-forma rent they pay themselves. This is the reason that in Switzerland empty buildings are quite rare, and you don't get speculators buying buildings to let them rot (in the belief that there value will rise anyway) as you do in many other countries. I think this is a very good setup as such dilapidated buildings can devalue whole areas. I know because I once had a property in such a street in the UK and had to sell under value.
My own formula is live in a cheap apartment in town and put your excess money into an out of town weekend property. You can still get them cheaply, but prices are rising.
When looking at buying property you may want to consider buying an older property and renovate it. If the last renovation was made 20 years ago you can deduct the whole amount from you income. This as long as the renovation sustains value and doesn't increase value.This of course is mainly interesting for those with high income and high marginal tax rate.
Any body out there that can offer advice on which is better, I would like to own my own home, getting the deposit together is hard and so many people tell me renting is better and you shell out lots less than if you own your own.