French property values continue to decline

IT'S no secret that we are seeing an accelerated decrease in the value of french property since the start of September 2008.

In a BBC news report yesterday, there was mention of a 50% drop in the number of properties in the Dordogne being bought by the British.

Property values in south west France are expected to fall by as much as 15% with regional variations from 10 - 20%.

House prices in the Dordogne needed correction after more than ten years of massive growth. Prices now are widely accepted by industry experts to have deflated to a more realistic level.

Under normal economic conditions, with property values corrected across France, this should have resulted in foreign buyers rushing to buy relative bargains.

Historically, 60% of all property sold in the Dordogne to foreign nationals were bought by the British. However, an underperforming British pound and a UK recession have seen that fall to 30%.

So, despite a considerable reduction in french property values, the opposite is true. Buying a property in France has actually become considerably more expensive for British buyers.

The weakening pound leaves them with less money to spend on French property and their dream home in France remains out of reach. 

Potential buyers are reacting in two ways.

Interestingly, some are undaunted and move inline with the economic indicators of the day.

They choose to gamble by placing offers that are more than 20% below the asking price in the hope that their offer is accepted.

Whether it is or not seems to be dictated by the particular circumcumstances of the seller.

There is a feeling among some British buyers that French sellers should understand their situation regarding their weakened buying power and seriously consider such offers. And some do.

Others, both buyers and sellers, are adopting a "wait and see" approach. The uncertainty of what lies ahead has severely dented consumer confidence across the globe. Many won't surface until the storm has passed and sees an upturn.

So, it would seem what's upholding the little momentum there is in the market is the uneasy marriage of cheeky buyers and anxious sellers.

There is a place for cheeky buyers in a depressed housing market. Up until 2007 they were few and far between. Buyers were concerned that low offers were insulting to a seller. Agents refused to put forward such offers.

Now, the tables have turned. 

It won't work in every case. Some lucky sellers are not that pushed to sell and are happy to hold out for their price even if that means waiting a number of years.

You would also expect the market to flood with new property for sale and a glut of houses to choose from in an attempt by sellers to get out of the market now.

But there are probably as many houses being taken off the market as are coming on to it.

Where foreign buyers outside the Eurozone are concerned, everything will depend on the currency markets.

There is still movement in the domestic French market which experts say is partly the reason a housing market crash in France is unlikely.

However, even if the French market bottoms out so that bargains abound it will all still continue to depend on a currency's performance against the mighty euro.

There has been a resurgence of interest in the French property market by expat communities in Hong Kong, Singapore and the UAE.

We are also seeing a marked increase in demand for property in the Dordogne from Australia and America.

The domestic market, buyers in the eurozone and interest from further reaches of the globe will be what keeps the French property market afloat.