Why recession could be the answer for the property market in the Dordogne

UNTIL recently, Geoff worked for many years in the highly stressful world of film special effects. He jacked it in to travel around Europe for a year with his wife, Laura, a teacher on a year's sabatical, and their two girls.

The girls go to school in Eymet and Sigoules. Geoff wants to write a book. 

Before settling in the Dordogne for the remainder of their time in Europe, the family travelled to some of the most interesting and beautiful places on the continent.

Geoff's an interesting man to chat with. He's a thinker. He makes some very interesting observations about life in France and the French lifestlye but last Thursday morning over a coffee on market day in Eymet, he came up with an intriguing theory.

It was based on a call from his accountant in Canada. His accountant never calls him. They usually correspond by email. The fact that he called worried Geoff. It also implied urgency, a call to action. His accountant had advised him to take a considerable chunk of the equity in his investments out in cash. 

He got the call a week before Lehman Brothers went under. Up until that point he thought his accoutant was being slightly alarmist. In the aftermath of the Lehman's story there came news of Morgan Stanley and Goldman Sach so he sat up and took notice.

France, as one or the most stable housing makets in Europe, will benefit from recession in other parts of the neoliberalist western world, Geoff maintains.

Why ? Because thousands of people like Geoff will take cash out of their plumetting investmests in those markets and want to put it into France. Why France ? Because, thanks to its conservative banking practices, it has managed to escape the credit crunch. Banks are still making 80% mortgages available at more favourable interest rates. House prices have stabilised thanks to corrections that have stimulated the numbers of transactions. Demand for housing is still strong.

Expats living in Hong Kong, Singapore and Dubai are looking for markets to invest in other than the US and Britain. Those at the end of their tenure in these cities are, understandably, reluctant to invest in their home countries. Others, whose investments are closely linked to the plummeting Chinese stock market are also looking elsewhere. They too will seek to invest in French property because it's traditionally a cautious and steady market.

His theory may hold some water. As we recently highlighted in our Dordogne housing market update we are starting to see an increasing number of buyers in the Dordogne. It's not normally something we would expect to see under the current global economic circumstances. So, there may well be some truth in Geoff's theory.

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