French Property Hit

Anybody thinking of getting away from it all in France might find it prudent to think again given falling French property prices. British buyers are as rare as truffles. Many of those already living there wish to sell up. If they are older people their pensions which are paid in sterling have fallen in value. Sterling and the Euro are virtually at parity.

There have been a number of seriously hyped articles recently about people who bought cheaply in France years ago who had renovated properties and are now selling at a vast profit with the intention of returning to England to bag themselves a bargain.

But there are plenty of statistics which suggest such scenarios are the exception rather than the rule. The truth is that few people today are interested in a tarted up chateau with acres of bedrooms, a tumble-down pigeonnier and a collapsed north wing, stuck out in the middle of nowhere with impossible heating bills and a serious damp problem.

The Great Crash has spelled the kiss of death for such adventures. Many such properties were run as hotels or B&Bs. Or they offered vacations in gites converted from barns. Other owners set up internet based businesses. Some sourced wine. Others taught English. More earned a few Francs as handy-men and houses-sitters, gardeners or maintaining absentee owners’ pools. Some tried to sell property to visiting Brits. Such enterprise has taken a hammering. Recessionary winds are blowing hard through France.

The French economy is inefficient. It has never gone through the pain of a Thatcher-style revolution. Sarkozy is doing his best but is meeting powerful resistance. He is trying to curb them but old evils still exist: over-manning, trade unions which are still too powerful, a lack of flexibility in the labour force, provincial rather than global economic thinking, a quickness to subsidise failing or uncompetitive industries and a tendency towards protectionism when trading circumstances become too aggressive.

It all seemed to be going so well in France. Property prices were holding up nicely when judged against falling prices in Britain and those in other favourite Brit countries such as Spain and Portugal. But France has now well and truly caught the price drop contagion.

There are numerous reports of property prices falling in areas that are traditional British favourites – Britanny to Bordeaux, the Languedoc to the Dordogne. Five or six years ago there were still bargains to be found. But then France had a price hike. Six years ago prices went up by almost thirty per cent in some areas.

In the face of all this government figures show that average house prices in France rose last year by more than 1.6 per cent. But statistics can be misleading. They include robust areas such as the French Riviera and major cities with established economies, including Paris. Legendary tourist and fashionable destinations such as those on the monied Cote d’Azur generally hold up better than many other places in the bad times.
When the statistics are studied more carefully major drops in different locations are revealed. Languedoc had a ten per cent price drop. Some of the lesser known and more remote regions are recording even steeper drops than that.