According to a recent survey in the French business magazine Capital (December 2009), the values of property in virtualy all the popular destinations favoured by overseas investors have suffered a double digit decline in value during 2009 - with the exception of France.
Within two years France's neighbour Spain has seen average prices drop by 30% (average price now around 2,200 euros/m²) while Portuguese property buyers have watched their investment decline in value by 15%. Among the other traditional European destinations, Italy has fared better with average price reductions of just 5 - 10 per cent, although in Greece the drop in value is generally closer to 20%.
A number of the more exotic markets, recently promoted as the new eldorados for overseas property investors, have come off worst. The hardest hit include Florida (USA) with a spectacular 45% price falls, and most recently Dubai (40 to 50% with further falls predicted). While in Eastern Europe, Bulgaria has seen prices drop by 25% in a single year and in Croatia - despite its 11 million tourists annually - average property prices have fallen by 20 - 30% since 2008.
In marked contrast, France's larger and more mature property market has not suffered a similar decline in property values, despite showing a slight slowdown during 2009 of the steady increase in values recorded over the last 15 years. This is due not only to the cautious lending policies of French banks but also to relatively high levels of capital gains tax payable on second-home properties bought and sold within 15 years.
France also enjoys a traditional culture in which property is seen as a long term commitment rather than a short term investment, with many properties handed down from one generation to the next. As a result the present economic uncertainty has led to a stagnant market (now showing the first signs of revival in December 2009) with owners reluctant to sell at knock-down prices and buyers playing a game of wait-and-see.
Government predictions indicate a need for around 500,000 new dwellings annually for at least a decade, as the country urgently renews its housing stock and France's baby boomers born in the 1950s approach the age of retirement.