freemarket

I had been considering retiring to France and have been looking around Perpignan for over a year - prefer Sorede or surrounding foothills. A local agent told me that prices fell around 4% in 2006 and in 2007. In recent visits it is clear there is a lot of flexibility on all properties - agents are talking of 10% off asking price deals falling through because of lack of mortgages. This implies an immediate price flexibilty of c10% on most properties. I have to admit there is a lot of rubbish property in France - old sheds extended poorly with the aim of selling to a Brit with no brain - such properties are to be avoided! There are many properties still around which were advertised over a year ago - so selling is a diffiult job and prices are too high. I suspect the over supply of villas and the price collapse in Spain is making Spain a relatively attractive alternative - maybe this is causing a gradual drawn-out decline? I am also aware of new markets opening up - Croatia, Turkey, North and West Africa for example, as well as the Middle East - especially the Middle East makes South of France a poor cousin. So France gets left in between the super rich and the relatively poor. I also wonder if people are having difficulty servicing holiday homes bought with Euro loans out of £ pay packets which are less secure. The £ cost has gone up and the expected capital gains in Euro terms are being depleted by price falls and although offset by the £ falling, the £ gains must be diminishing as well as Euro prices fall. I am being advised there are fewer UK buyers going to France - but those who have retired there, stay there. house prices are falling everywhere!

I have been looking for a while now - prices at agents are being held. but agents start by telling you of a 10% flexibility! By telling of deals which have 'unexpectedly' fallen through - this is followed by enthiusiasm and apparently other bidders. I saw some houses today which are where I would have thought a dustman or road worker might end up - probably priced at 20 times the salary of such a worker. This is incredible - I reckon prices could fall by a huge magnitude once the recession bites. Few houses are selling; landlords are giving notice in order to sell, others not selling are offering for rental at discount rents - there is no shortage of rentals. there is only one way out of this - high inflation and massive price falls my money is not going anywhere near the property market in this country for at least two years unless there is an 'off the cliff' type of crash. But even at 50% - what dustman can afford a house at 10 times earnings? and who would lend to him if prices dropped that much?