Where should your owner-occupied home be situated? Here's how to find the right location for your property.
When choosing your future residential property, it's essential to not only think about the property itself, but also its location. Properties in attractive residential locations come at a price, which makes it even more important to be completely clear about your own needs and preferences.
The best residential location is a personal choice
"When deciding where to live, the personal user value is important – and this varies greatly from person to person. It depends on your individual needs and circumstances," says Felix Thurnheer. "For example, if someone feels that a wide range of restaurants is important, then it's advantageous to pick an urban location. On the other hand, if someone likes walking their dog in the countryside, the suburbs would be more suitable."
If you're looking for residential property, the first step is to define your requirements in terms of location: What is important to you about your home? Peace and quiet in natural surroundings? A central location? A nice view? Proximity to public transportation? As you consider this, think about the future too and how your needs might change, for instance if you have children or as you get older.
The location of the property influences the price
Suppose we build three identical houses in different locations: one in the center of Zurich, one on Lake Geneva, and the third in a mountain village in the Canton of Valais. It should be obvious that we will achieve three completely different prices when we eventually sell – even though the houses are exactly the same. Because the value of a property basically consists of two components, the value of the building and the value of the land. And the value of land depends to a large extent on the location.
Match your preferred location with your budget
And so the next step on the road to home ownership is to check whether your requirements are realistic. To do so, you must be clear about your financial options, which it is best to clarify with your bank in a personal consultation. You can get a rough idea by using an online mortgage calculator.
Then compare your budget with the prices of properties in your desired area. People who want both a short journey to town and a wonderful view with little noise are likely to be disappointed. "Prices are determined by supply and demand. That's why properties at attractive locations come at a price," Felix Thurnheer explains. In this case, it is important to consider which factors are most important for you – and which you can do without.
The following points will help you to decide:
Demand for residential property is greatest in central locations. Locations in the catchment area of several labor-market centers are also attractive. For home owners this means that central locations come at a price. People who are prepared to commute further can find more affordable housing. Ask yourself the following questions: How important is it for you to have a short journey to work? How much are you prepared to pay for that? What is the maximum commute time you would consider?
The level of taxes
One rule of thumb is that, where taxes are low, demand for residential property and real estate prices are high. Therefore, people who are prepared to pay a high price for a home in a municipality with low tax rates will save tax later. Before buying your dream home, find out about the tax rates in the municipalities. Calculate the annual tax differences and compare them with purchase prices.
The appeal of a residential location also depends on its immediate environment such as the district and neighborhood. Mountain or lake views are especially attractive, as is proximity to a lake, school or kindergarten, to shops, local transportation, and green spaces. By contrast, sources of noise such as roads and railway lines have a negative effect. "But the factors vary from region to region. For example, in the Canton of Zurich, a mountain view pushes real estate prices up, whereas in the Canton of Glarus you can see the mountains from almost every house," says Felix Thurnheer.
For home owners this means that the prices of properties also vary within a location. Think about the factors that are important to you in the surrounding area. If one of your preferred factors makes properties significantly more expensive, it's important to weigh up how much it's worth to you. If you like a property, you should also find out exactly about the surrounding area, infrastructure, and the neighborhood. Felix Thurnheer's recommendation is that: "The best thing is to visit the street and the district on several occasions at different times of day in order to assess the neighborhood, the noise level, and the position of the sun."
Number of annual incomes required to purchase an apartment
Property prices vary widely depending on the location. You can find the reasons underlying the prices by clicking on the corresponding location.
The location of a property does not explain all price variations
Not all price differences can be explained by objective locational factors. For example, properties in supposedly unappealing locations sometimes achieve high prices, and those in positively rated locations are sometimes sold cheaply, according to Felix Thurnheer. "Because models for locational attractiveness take measurable factors into account such as noise levels or the proximity to public transportation. But we only measure what we can. For instance, a model can show the distance to a kindergarten, but not whether there is heavy traffic on the way...," the real estate expert explains. "In addition, over 60% of prospective buyers already live in the region where their preferred property is located. They have their roots and their network there, and that's where they spend their day-to-day lives. Locational factors are not really relevant for them."
Have the purchase price checked at every location
Before signing the contract of sale for a residential property, you should check whether the price matches the market value. "Because, apart from the usage aspect, it's important for a property to maintain its value. After all, when it comes to reselling the property, you will want to sell it for at least as much as you paid for it," Felix Thurnheer explains. For this, it's a good idea to consult an expert from the region, who should inspect the property on site in order to assess its condition. If major expenditure will be needed for renovations in the near future, this information can be used for the price negotiations.