FRANCE:Apart from Paris, property prices are falling right across France, offering some of the best buy-to-let value in a decade, writes Peter Cluskey

FRANCE HAS always prided itself on its ability to remain insulated from the more destructive effects of globalisation. But 2008 will be remembered as the year the aftermath of the US sub-prime mortgages debacle swept through the French real estate industry - leaving redundancies, closures, unsold properties and slashed prices in its wake.

A survey last week by the daily newspaper, Aujourd'hui En France, revealed that prices have already fallen this year by between five and 25 per cent depending on the part of the country, with Marseille, which has a large stock of new unsold property, among the worst affected.

And the volume of sales will be down nationally by 15 per cent on 2007, forecast Hervé Bléry, president of estate agents, Century 21.

France has always had two distinct property markets: Paris and the rest of the country. In the past, Paris typically led the annual charge with healthy, double-digit price increases, while the provinces usually managed high single figures. But 2008 was also the year that Paris and the rest went their separate ways.

The capital continued to climb, though by a more modest 9.4 per cent to an average price of €6,500 per sq m (€603 per sq ft), while the provinces plunged.

There are several strands to the French crisis. The sub-prime fallout - including the collapse of Lehman Brothers - has led to questions about the stability of French banks, which in turn have increased interest rates and cut back on mortgage finance.

At the same time, the French economy was already brittle and consumer confidence is now at its lowest in decades. And to make matters worse, a weak sterling has made buying in euros very expensive for the British - usually the most active foreign buyers in rural France.

As a result, while the impact of the property crash in Spain has made international headlines, it's passed almost without note that French estate agencies have been closing offices in what used to be some of their busiest locations.

In the Dordogne, for instance, the most popular part of the south-west with the British and increasingly with the Irish, five offices have closed in the medieval town of Sarlat. In Montignac, which attracts hundreds of thousands of visitors every year to Lascaux Cave, four have closed, including the local branch of La Forêt, a nationwide chain.

"Transactions are considerably down compared with this time last year," says Karen Davies of Lafayette Immobilier International. "Though interestingly, the number of client contacts has been roughly the same, so people are showing an interest but not buying. I suppose you could say the coup de coeur element, as the French would call it, is gone."

Lafayette itself, with offices in France and Holland, has been cutting back to match the downturn. At the start of the year it had eight branch offices in the south-west; now it has just three. "We've seen property prices falling by between five and 10 per cent," says Davies. "That means sellers are reducing the prices themselves in an effort to attract buyers, or they're accepting lower prices during the negotiations."

She gives a striking example of a British couple who visited her office in Les Eyzies at the end of May, interested in a particular property. Because of exchange rate volatility, the €250,000 price was costing them £196,417 on May 29th and £198,522 the following day, a full £2,000 more - with no way of knowing how much more it would increase by the time the deal closed two months on. They decided they couldn't take the risk.

It's the same for sellers. One Dutch woman, who asked not to be named in case it weakened her position when she came to sell, said she put her four-bedroom, fully renovated former farmhouse, with swimming pool, on the market at the start of the year for €450,000 but had already reduced her asking price to €375,000. Even so, the sterling-euro exchange rate meant that the sterling price remained almost the same.

"The simple fact is that the British are the most important buyers in this region, which is why the sterling price is so important," she says. "And when you combine that with the fact that many British who want to buy here are having problems selling their own homes in the UK, it's making the market very, very sluggish.

"It's been very frustrating, especially since just 18 months ago all the property programmes on TV were telling buyers that the Dordogne had become almost as expensive as Provençe and was impossible to buy into.

"Now I'd regard it as pretty good value for anyone buying in euros - especially since it's a hugely popular green holiday destination, and a house like mine can easily generate a rental income of €1,500 a week as a holiday-let in the high summer season."

There will always be fireproof areas, of course, but a look at some Provençe estate agents shows that prices are being reduced significantly there too. Just one example: Leggett Immobilier has a three-bedroom house, with a big country kitchen, a courtyard and garden, in a quiet village just 10 kilometres from Avignon, on the market for €278,200 - reduced from €397,500.

Similarly, just an hour from the chic port of La Rochelle on the Atlantic, Frenchpropertylinks.com has a fully renovated 17th-century mill on two acres, complete with three successful independent gîtes, for a reduced price of €540,000. The property has a swimming pool and a lake stocked for fishing.

So as long as you're not buying in sterling, it's a great time to invest. Reductions such as those make property all over France highly attractive. Economists say the current correction is not expected to become much more dramatic, given that prices here have never been overheated to the same extent as in Spain or Ireland, and there's no question of oversupply.

In the French media, however, the words "property" and "crisis" are now inextricably linked - though there is the occasional bit of levity. One newspaper recently ran a front-page cartoon showing the beleaguered French soccer manager, Raymond Domenech, famous for his lack of a sure touch, chatting with an estate agent.

"I'm giving up football and moving in to the property business," Domenech tells him. The agent replies: "Now we really have a crisis!"