Credit Crunch Hitting French Property Market

France is not immune to the credit crunch as British buyers are absent from the French property market due to lack of mortgage funds

The appeal of the French natural landscape, the cuisine and fantastically laidback lifestyle has been luring Britons across the Channel for years.  France is still one of the most visited nations by us Brits, and what’s more it’s a country that so many of us love with a lasting passion that we actually want to make a more permanent home there.

The desire for a second home or even a retirement or new home from home in France has led to record numbers of us Brits seriously contemplating making our love affair with France something of a more lasting and meaningful relationship – and the British passion for a French home has been one of the strongest factors driving the French property market for decades.

Now however things in France have changed, and the landscape of Britons buying French property is barren.  It seems that the credit crunch is hitting the French property market after all.

In a story reported in the Telegraph this week, a British couple tell of how their dream of moving to the Dordogne was shattered as a direct result of the lack of bank financing now available.  The couple found their perfect property, had made an offer and were progressing with the purchase having agreed a bridging loan whilst they sold their English property.  The loan was with a French lender, but the lender withdrew at the last minute informing the couple that they no longer lend to British buyers.

The situation could well have been similar if they had arranged the loan with any of the British banks that formerly allowed people to raise mortgages on property in France.  After all, none of the banks are readily able to lend to new buyers let alone those who want to make a more ‘risky’ venture and buy abroad.

So dire is the lending situation that estate agents in the Dordogne have said that they’re living through a drought in terms of buyer numbers, with British buyers having diminished in number by about 50% according one leading agency.  This is seeing estate agents closing up shop, properties remaining on the market unsold, and buyers drastically slashing prices.  But if us Brits cannot raise the money needed to buy a property in France from a bank and we’re in a situation in the UK where we cannot sell our current homes to fund a purchase, how are we ever going to get out of this stalemate?

Surely something has to give eventually and banks have to start lending again.  But if and when this will be no one can tell.  Meanwhile all is calm and stagnant in the French property market and increasing numbers of Britons are having to put their dreams of a relocation overseas on hold.