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Historical cycles

10th October 2008 | back to article listings BACK    print this article PRINT

At a time when investing anywhere, be it in overseas bricks and mortar or Icelandic banks seems a fraught undertaking, many will be wondering if they can find bargains in localities where prices are low now but the historical trend is for values to increase.

Such a prospect may exist in the Dordogne region of France.

Writing about the region this week, French property firm VEF said this part of the country has historically seen substantial price rises. Between the start of 2002 and the end of 2007, house prices in the region rose by 45 per cent.

Yet at the same time, the website noted, the recent trend has been for prices to come down. The reason for this is that overseas buyers - which includes Britons but also those of many other nationalities - have been more limited because of the financial pressure placed on them by the credit crunch. So while France's banks are stable through having little connection with the US subprime market, the external impact of the crunch has affected prices.

Of course, this can have advantages for investors. With prices a little lower and buyers fewer in number, it becomes possible to negotiate prices lower still. VEF noted this, as has Shelter Offshore, which pointed out that this is possible in France as a whole.

In turn, this could mean investors in the Dordogne being able to enjoy low prices now but also a return to growth when the market picks up again, with the result that the value of their investment increases sharply.

One factor which the region has to its advantage is accessibility, with the close proximity of the international airports at Bergerac, Bordeaux and Limoges. A new airport will soon open at Brive la Gaillarde, so the potential of this factor to help prices rise again when the better times return could be greater.

In the meantime, the prospects for those wanting to buy in France could be getting better already, reports French Property News. The reason for this optimism, the site suggests, is the joint decision of several central banks to cut interest rates simultaneously by 0.5 per cent this week.

One reason for this is that with UK interest rates down, all Britons with tracker mortgages and some on standard variable rates will now be better off, with the extra money made available enabling some to have more cash to spend on French property acquisitions.

Commenting on this, the chief executive of exchange rate firm RationalFX Rajesh Agrawal told the website: "This will open up the French property market further, as many house buyers are in a better position now to make a purchase than they were before interest rates were cut."

So while the world economic situation looks a bit gloomy now, the prospects for French property may be anything but.

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