Bordeaux - The yearning of middle-class Britons to retire to a French farmhouse with a glass of wine is under threat as the financial crisis casts a shadow over dreams of a lifestyle makeover.
"It started around Christmas last year with the rise in value of the euro against sterling," said Richard Dannreuther of Euro Immobilier estate agents in the south west town of Chalais.
"People were suddenly paying up to €40 000 more for a house as the euro rate went from about $1.42 to $1.30 against sterling. And now the mid market, for houses between €200 000 and €500 000, has almost totally dried up compared to this time last year," Dannreuther said.
For a small agency like Dannreuther's, the fact that he and his wife now have 300 homes on their books, compared to about 180 last year, the situation is not ideal. "We can only hope for a turnaround and that more money comes into the loans market," he said.
The Charente region, where Dannreuther is located, as well as Aquitaine, Provence and Brittany are all popular places for Britons, but the Dordogne is one of the most favoured.
The number of permanent British residents in the Dordogne is estimated at between 20 000 and 25 000, and up until last year, 30% of the property market was estimated to be of British origin.
This year the market has tanked and several estate agencies have gone out of business. Others are laying off employees.
"It's a bit tense," said British-born Charles Gillooley, president of the Dordogne office of the National Federation of Estate Agents (FNAIM).
House sales fall by half
Starting with the drop in value of sterling, followed by the crisis caused by the subprime mortgage disaster in the United States, Gillooley estimates British sales have fallen by half.
"They can't sell (their homes in Britain) anymore, that's the problem," said Jerome de Chabaneix, director of three Dordogne agencies, in Eymet where 80% of clients are British, Lalinde and Beaumont. This year, he said, turnover has fallen by 40% and he has laid off four of his nine employees.
"Their market is blocked, so they are not investing," agreed Wilfrid Paul, director of Square habitat-immobilier 24, an estate agency in Bergerac, in the Aquitaine region near Bordeaux. Paul said his British market has dried up over the past year.
The gloom spreads up to Brittany in western France.
"Things have definitely slowed down," said Denise Duncanson, a Scottish estate agent in the village of Guemene sur Scorff.
Only four years ago, said Duncanson, people who had never been to France would arrive simply after seeing a programme on TV, in the aim of selling everything up and opting for a French lifestyle. But today people are more cautious.
"Before, people would come out and sign an agreement to buy a house before they had sold back in the UK. We certainly don't advise them to do that now," he said.
Duncanson is at least surviving, which is not the case for Dan Newton, whose company in the Brittany town of Locmine ceased trading in September.
"Before," said Newton, who moved to France two decades ago, "about 60% of our turnover came from UK clients wanting to move here. Before we closed that had fallen to just 5% ... people couldn't find buyers for their homes in the UK."
Compounding the problem is the fact recent arrivals are less affluent than before. "Now they are younger, arriving with their families and they need to find a job," said Alexandra Thevenet, who runs the Franco British Chamber of Commerce in Perigueux.
A decade ago they were retired professionals, who sold a London apartment and bought a stone chateaux surrounded by land with the proceeds.
"Their budgets were €500 000 to €800 000, now its €250 000," said Chabaneix.
One ray of light, thanks to the recent bank meltdown, said Dannreuther, has been a spate of calls and emails from people looking for a safe place to put cash.
"Suddenly there are people wanting get their money out of the bank and into property and they are looking to buy something for €125 000," he said.
"That's brand new. They just want to buy and let it sit there for the moment."
Other agents agree. In general they say demand is holding steady at both the lower (€100 000 to €125 000) and upper (over €500 000) ends of the market.
And another thing they all agree on is the market coming back, eventually.
"It's cyclical," said Gillooley philosophically, recalling the last holiday home crash in 1991 sparked by the Gulf War. "Back then we lost about 30% of business between 1991 and 1995."
There are many similarities between 1991 and the current crisis, Gillooley added though today's seems "less brutal".
"We saw this one coming. In 1991 it was everything fine in August and then September, not fine," he said.
"This one won't get better overnight," he added. "But if bank refinancing works out and confidence - which is as important as the reality - comes back, we could see an upturn by spring 2009."
- AFP