The Dordogne Property Market in 2011

January's the time when everyone predicts developments in the year ahead – so what better time to look at what is likely to be happening in the Dordogne property market?

The present situation

The Dordogne property market is basically seasonal, with househunters visiting the region from the Spring through to the autumn. Start and end dates tend to vary with the weather. The "grey pound" is manifest at the beginning and end of the period, outside the school holidays, while families will take advantage of the school holidays to search as a group. So the winter months, from December through to the end of February, are usually the quietest.

No surprise, then, if I start by saying that the position is not radically different from the autumn of last year, with prices depressed and a lot of stocks on the books. That means, of course, that there are bargains to be had where vendors are obliged to sell, for personal or other reasons. In March 2007 we took on a house for sale at 649,000 euros. Under the pressure of a bridging loan, the vendors reduced the price gradually but had difficulty in finding a buyer, until they reduced the price drastically to 367,500 euros in the autumn of 2010, when it sold immediately. Another property originally started at 1,170,000 euros but only found a buyer when the price had been reduced to 712,000. In both cases the buyers had looked at a number of other possibilities and recognised a bargain when they saw it.

Prices in 2011

Statements about French property prices rising need to be taken with a pinch of salt. Paris prices have soared because of a shortage of supply. Demand on the Côte d'Azur remains good, we understand, although prices there have fallen more than agents are prepared to admit. In the Dordogne prices remain stagnant, because of the excess of supply over demand.

Part of the reason for the drop in prices was the impact of exchange rates on British demand. The pound fell at its lowest to a point close to parity with the euro. But as the pound has recovered – at the time of writing it is worth around 1.19 euros – prices have not moved. Exchange rates are therefore only part of the picture.

When the pound collapsed, British vendors intending to repatriate funds were able to take advantage of the strong euro to achieve a decent return in sterling, in spite of lower French prices. However, with the pound now hardening, those intending to repatriate funds will receive less for their euros. They may be caught in the pincer movement of a strengthening pound and a sinking property market.

In practice, the impact of the exchange rate is likely, in our view, to make prices harden, while the excess of supply over demand will prevent them rising.

Should you sell?

The Dordogne property market is not particularly volatile, so the position is unlikely to change materially over the next six months. Some commentators predict a further strengthening of the pound, to a level of 1.30 euros, so this should be factored into any risk analysis. Equally, however, predictions concerning the UK property market are fairly gloomy, so if you want to repatriate funds for a UK purchase you may not lose out.

In our view, the most important decision is how you want to lead your life. Hanging on when you want to be somewhere else may simply be frustrating and, in the long term, become unendurable. You should take a careful look at the way you want to live over the next five or ten years and then consider the price you will have to pay. Is there a downside? Is the cost worth it? only you can decide.

One thing we are certain of: any sale price needs to be at a realistic level, taking account of agents' advice. Don't fix a price by reference to what you need to buy elsewhere. Prospective purchasers are interested in the price you're selling for. Your own purchase plans are irrelevant to them.

Should you buy?

It remains a good time to pick up a deal. Prices are generally depressed, and a number of properties have been on the books for longer than owners are happy with. Don't think vendors will accept any derisory offer you may care to make. Each vendor's position will be different. Shop around and take advice. But don't delay too long over your decision to buy, since one thing is sure: the property market is always changing, like everything else. In six months or a year the position may well be different.


Antony Mair
MCM Dordogne Property