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Dreaming the impossible

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For the first five years in Switzerland, I assumed that I would never, ever be able to afford a home here. I mean, when I first started I was earning 200CHF a week as an au pair. There was no way in hell I’d ever have enough for a 200,000CHF deposit.

Swiss House

After I changed jobs, Kay and I would still chat about it from time to time. His parents own a house and I was vaguely interested in how the buying process works here, but I didn’t understand it. Kay explained that the aim was not to own 100% of your house and that you would always owe the bank money.

That just didn’t make sense.

I put my house-buying dream up on a shelf for a long time and forgot about it. Years rolled by, we got married last year, and somewhere around November/December, two things became important:

  • After three-four years of saving from our big boy and big girl jobs, we were actually starting to have a sizable chunk of money.
  • Everybody was talking about the crazy low interests rates in Switzerland.

When I say “crazy low” interest, I mean it. Interest rates effectively dropped to 0% for Libor mortgages in September/October 2012. That doesn’t include the bank’s cut, but it was enough to pique my interest.

Fixed mortgage rates were hovering around 1.5% and I learned that my FIL’s mortgage payments were about 1/10th of our monthly rent. With that knowledge, I had to at least figure out how it all works!

Homeowners, what got you interested in buying?

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Nobody buys a home in Switzerland

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Allow me to explain why I spent the first four years of my time in Switzerland under the belief that I would never buy a home here.

First, let’s take a look at a few of the buying prospects:

1) 4 Bedroom flat, 138m2 / 1500 sq ft, CHF 2,490,000

Urbanes Leben im Hürlimann Areal via Homegate.ch

2) 2 Bedroom flat,  85m2 / 914 sq ft, CHF 1,050,000

Neuwertige Stadtwohnung mit hervorragender Infrastruktur via Homegate.ch

3) 1 Bedroom loft flat,  81m2 / 870 sq ft, CHF 970,000

‘Architekten Loft / Wohnatelier’ in Zürich-West via Homegate.ch

4) 3 bedroom house, 145m2 / 1560 sq ft,  CHF 2,250,000

MODERN EINGEBETTET IN KÜSNACHT via Homegate.ch

5) 5.5 bedroom house,  200m2 / 2150 sq ft,  CHF 5,600,000

Liebhaberobjekt via Homegate.ch

Now maybe the pretty pictures above were distracting, or maybe you think we’ve got crazy inflation with CHF*, but I’m hoping you noticed that these digs are all crazy expensive.

*At the time of writing this, $1 = .93 CHF, so all those prices are even more expensive in dollars.

A one bedroom flat can easily cost one million dollars and you can forget about buying a normal house. As I write this, there are only 10 single family houses listed for sale in the city of Zürich. Half of them are 2.5-5 million francs.

If you are lucky enough to find a house or flat available, chances are that you cannot afford it. Why not?

One scary word: Deposit.

The general rule in Switzerland is that you need a 20% deposit on a house in order to get a mortgage. How does that work on on that 1 bedroom flat above?

Holy shite. I don’t know about you, but I don’t have 200k in my pocket, let alone 500k for flat #1 up there or 1.12 million for house #5.

When I figured out HOW much buying in Zürich would cost a couple years ago, I simply wrote it off in “the impossible” list and didn’t think anymore about buying for a long time. I had forgotten then that where there’s a will, there’s a way.

Although over 70% of the population here rents, someone has to be buying houses somehow and it cannot be the billionaires alone, can it?