I don't think you should wait for the bubble to burst if you want to buy a household, it might take too long. But hell if I know anything, so draw your own conclusions.
If I had the money I'd just focus on buying something modestly priced in a good location, even if it's not my ideal house. If you don't plan to sell for at least 20 years then what difference does it make anyway.
The issue is that to afford anything in Zug we have to heavily lean on a mortgage. A bit afraid to take so much debt in this uncertainty.
We did not see a problem when discussing a potential mortgage with UBS. They seemed quite inclined to lend the money. Having a bank account is another matter - being regular Joes, we are more of a regulatory headache for the banks as customers.
What scares us is the crazy valuations of houses or apartments in Zug. We lived through the property meltdown in Michigan in the 2000s. The value of our house there is still, even after some recovery in the last 3 years, about 25% below the price we paid for it in 2002. With the property pricing up 2x-4x in the last 15 years in the Zug area, there is a lot of room on the downside should things start to go wrong. And because we have to go deep in debt in order to afford a 4.5 room apartment we will be brought down to knees if things go south. So, the dilemma - buying the property will cut our monthly rent payment by 45% and we will be building equity if values are stable or rising. BUT, if things go south, we will likely lose it all .... Damn, I wish I was 25 yo again and still had 9 lives before retirement ...
I've done a simple calculation in excel: If you wanted to buy a CHF1,000,000 apartment and put 20% down and you could get a 25 year fixed-rate mortgage at 1% (all hypothetical) you would have monthly repayments of ~CHF3k.
Now, lets assume that rates returned to the 4% level. In this case the monthly payment goes up to CHF 4,300k which is a ~40% increase in the monthly payment.
This type of increase could be unsustainable for many household budgets who have little to no savings and are unable to absorb an interest rate hike.
The key question, and this is a tough one to answer, is would the Swiss Central Bank allow rates to rise knowing that many people would be faced with defaulting on their mortgages and that this would have a knock on impact on the Swiss banks that lent to those home buyers?
Sorry for the long winded post but my suggestion would be to see if your budget can withstand an increase in interest rates before buying anything. IF you can afford to service a mortgage with interest rates at 3-4% then you should be okay buying. If the deal only works for you with rates at 0.5-1% I would avoid buying.
If that is the case, then surely, an increase in price would be equally bad if you won't have enough liquid assets to top up your equity.
Are there 25-year fixed mortgages in Switzerland? The banks we talked to here did not offer long-term fixed rate mortgages.
You could always just rent instead. How long would it take to 'save' just the deposit on the property from the difference in rent and mortgage you are looking at?
And there might be other fine print as well. Examples:
http://mobile2.tagesanzeiger.ch/articles/23332640
http://mobile2.tagesanzeiger.ch/arti...da8b60be000001
The latter article also mentions that today the banks often do not strictly follow any of the officially required criteria. However, this is relevant for the deposits than mortgages.
It's not easy to be 'house poor' in Switzerland. You really need a cushion against the unexpected.
(As an example take the lowering of the emmission standards - suddenly we were required to replace our perfectly good furnace, to the tune of 25K. )
So as you are doing your sums, do add in something for a cushion against the unexpected. Because if there is one thing on this earth you can expect with certainty, it's the unexpected. And as a homeowner, the unexpected often carries a pretty big price tag.
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I am conservative by nature. So our equation was largely figured on savings vs rent rather than on investment value of the house. Turned out that probably was a good approach, as our house is probably still worth about what we bought it for 11 years ago - no, or at least not much, appreciation in that time. (Well, it likely appreciated during the bubble, but then lost all that as the Ausserschwyz bubble deflated.)
But Zug is more financially stable than SZ, likely better placed to weather economic difficulties (and the increased NFA extortion contributions) without having to increase taxes. It is the looming tax hike that is largely giving the SZ property market a case of the jitters.
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Do I remember that you are an American? If so, do make sure that you understand the US tax consequences to selling property outside the US. Our dear Uncle Sam views it as both a property sale and as a forex transaction. So your crystal ball might need to factor in currency fluctuations as well, depending on your timeframe.
And of course, do remember that as a US citizen (if indeed you are one, forgive me if not) you might not get all that much tax benefit, individual situation dependent. See a tax pro for advice before you sign on the dotted line.
Good luck with the decision!