Investing in real estate, is it always a good idea?

Oh… Real estate… 

We have all heard the amazing story of the visionary (or lucky) friend of a friend of a friend who bought a house and resold it for triple of the price a few years later. 

Wow!

We have all watched the sad spectacle of subprimes in 2008 and the direct demise of the American dream. Entire families ending up in the street, financially incapable of reimbursing loans taken out by wolves of finance. 

Shoot!

Woold the real estate market be a monster with feet of clay? A paper tiger? A House of Cards?

Let’s put the newspaper down, turn off the TV and analyze the numbers.

According to a collaboration between the website comparis.ch and the Chair of Entrepreneurial Risks of the EPFZ (anyway, this is serious stuff!), the price per m2 in Lausanne for an apartment went from 5,500 CHF in 2007 to 9,000 CHF in 2018, reaching a peak of 9,400 CHF in 2017 (the figures are rounded up to the next hundred). 

You will tell me: “But Noé, we know very well that prices keep rising in Lausanne. what other city will you cite to make your point? Geneva? Zurich? Fire burns and water wets thanks a lot!”

True, all you have to do is start looking for an apartment in Geneva or Lausanne to understand that prices are not about to decrease. 

Actually, while the price per m2 in Geneva remains astronomous, this city of Calvin is not the one that has seen the biggest price fluctuation, going from 7,500 CHF to 11,000 CHF in 2018.

At Le Locle, the price per m2 experienced a 72% variation for the indicated period, one of the most impressive in the entire country! In 2007, the average rounded up price per m2 was around 2,000 CHF, compared with 3,400 CHF eleven years later.

Of course, no one can guarantee future prices, predictions remain, precisely, recent calculations, nothing more. 

Even more so that, even in an area as small as western Switzerland, specialists (who spend their days calculating tendencies) are having a hard time to draw an obvious line. Their algorithms are irreparably torn between secluded areas where owners offer the first three rents to their future tenants and real estate agencies in Lausanne who have countless tenant applications.

“Ok Noé, we understood, but is there still a pattern that emerges or not?” 

Yes! The real estate market is settling down. It is unlikely that, in the years to come, the price of housing will increase in the same way as the previous years. As the requirements to take out a mortgage become harder, access to property becomes more complicated and the demand decreases. 

Do you have an opinion? A suggestion ?

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