Wise purchase of investment property in the price boom
Published by Michael Rose, 22.06.2021
Competition for attractive properties in the Swiss real estate market has increased further over the past 12 months. Attractive properties are in demand and prices have risen further. This applies not only to owner-occupied residential property, but also to investment properties in particular. The price upswing is particularly pronounced for properties with a predominantly residential component ("Residential").
A purchase becomes more and more demanding
This development can also be observed in the other major markets, particularly in the world's largest and most liquid real estate market, the USA.Median transaction prices for residential properties increased by 11% in the USA, 9% in Germany and 8% in the UK in the course of 2020, a trend which continued in the first half of 2021.
We observe that even solvent buyers in Switzerland are finding it increasingly
challenging to acquire the desired property. In addition, the proportion of properties for which the transaction is above the original advertised price has increased significantly.
Lengthy bidding rounds or quick transactions
All real estate sellers prefer in the transaction: - Price: Highest possible transaction price - Reliability: High transaction security - Speed: As fast as possible, definitive purchase decision
However, these goals are in conflict with each other; bidding processes regularly lead to higher prices, but they are naturally more protracted and costly.
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In the current market environment, a buyer wishing to secure a property has to offer a very competitive price directly and also to rely on the factors of speed and security. In practice, the buyer must either have the purchase price available at the time of the offer ("all cash offer") or be able to convince the buyer that he will be able to pay the purchase price within a very short time.