Where should your home be situated? Here's how to find the right location for your property.
When choosing your future home, it's essential to think not only about the property itself, but also about its location. Properties in attractive areas come at a price, however, which makes it even more important to be completely clear about your own needs and preferences. Felix Thurnheer understands that. He is a real estate appraiser with the Swiss Association of Real Estate Appraisers and has been working in the real estate sector for 20 years. Read on for his expert tips and advice on how to find the right location for your property.
What is meant by location?
The location of a property refers to its geographical surroundings in relation to the quality of the area. It's characterized by factors such as a quiet neighborhood, good infrastructure, and a pleasant living environment.
When searching for a property, it's important to carefully consider its location as this can increase the resale value of the home and will have a significant impact on your living conditions – and consequently on your quality of life.
The best residential location is a personal choice
"When deciding where to live, the usefulness of the location plays a key role – and this varies greatly from person to person. It depends on your individual needs and circumstances," says Thurnheer. "If, for example, someone feels that a wide range of restaurants is important, then an urban location offers numerous advantages. If, on the other hand, someone likes walking their dog in the countryside, the suburbs would be more suitable."
If you're looking to buy a property, the first step is to define your requirements for the location: What's important for you to have at 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
Imagine we're building three identical houses in different locations: one in downtown Zurich, one by Lake Geneva, and one in a mountain village in 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. The value of a property essentially comprises two components: the value of the building and the value of the land it's built on. And the value of land depends to a large extent on the location.
Matching your search location to your budget
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 through 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, which is why properties at attractive locations come at a price," Thurnheer explains. In this case, you should consider which factors are most important for you – and which you can do without.
The following three points will help you decide:
1. Proximity to downtown
The greatest demand for residential property is in central locations. Locations in the catchment area of several labor-market centers are also attractive. For property owners, this means that a central location comes at a price. People who are prepared to commute further can find more affordable housing. Ask yourself the following questions: How important is a short commute to work for you? How much are you prepared to pay for that? What is the maximum commute time you would consider?
2. Tax rates
As a general rule, 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.
3. Microlocation factors
An area's attractiveness depends not only on the macrolocation, which refers to the region or city, but also on the microlocation, i.e. the immediate surroundings such as the neighborhood and the district. Mountain or lake views are especially attractive, as is proximity to a lake, school or kindergarten, to stores, local transportation, and green spaces. By contrast, sources of noise such as roads and railway lines have a negative effect. "The factors vary from region to region – in the Canton of Zurich, for example, a mountain view pushes real estate prices up, whereas in the Canton of Glarus you can see the mountains from almost every house," says Thurnheer.
For property owners, this means that real estate prices differ within a location too. 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 everything about the surrounding area, infrastructure, and the neighborhood. Felix Thurnheer maintains that the best thing to do is "visit the street and the district at different times of day in order to assess the neighborhood, the noise level, and the position of the sun."
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 Thurnheer. "This is because models for evaluating a location's 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's 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, in addition to the usage aspect, it's also important to preserve the value of a property. 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," Thurnheer explains. For this reason, 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.