4.30 AM Wednesday, 24 July 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:16 05:39 12:28 15:52 19:12 20:35
24 July 2024

Weak pound ends British love affair with French holiday homes

French projects may have be shelved due to sterling's slump. (AFP)


The pound's collapse is making Britons think twice about heading across the English Channel for a break – and their love affair with buying French holiday homes is well and truly over, experts say.

The British currency has plunged by some 20 per cent against the euro in recent months, casting a deep shadow over the mood at this mont's annual France Show in London, which showcases the Gallic holiday and property market.

Visitors were softened up with Beaujolais nouveau and saucisson, the strains of accordeon wafting in the background, but many admitted that their French projects may have be shelved due to sterling's slump.

"This move down is a shock, but it could be the kind of path of things to come," said Mark O'Sullivan, director of dealing at foreign exchange specialists Currencies Direct.

"The euro may trade at 1.10, 1.20 for the next couple of years, so we need to be used to where it is, to be quite honest," he added, at the France Show, attended by some 30,000 Britons.

The British pound posted a weekly decline against the euro on speculation the Bank of England will cut interest rates at a faster pace than European policy-makers to revive the economy.

The British invasion of some parts of France is well documented: for years buyers flush from booming property prices here have bought property in places like the Dordogne, turning some areas into virtual British enclaves.

But that has all changed. "People are really nervous," said Steve Gillham, estate agent for Alliance French Property Group, adding that his company had had virtually no sales since last October.

And Guy Lesage, a lawyer from the Creuse department in central France which has been inundated with Britons buying up ageing ruins at a fraction of prices for similar properties in Britain.

"We've seen a collapse in the number of deals, far fewer purchases than in previous years. Its been moving this way since the summer of 2007," he said.

"Between 2000 and 2007 we sold properties for up to €800,000 (Dh3.5 million) , those are big prices for the French countryside, but now prices aren't going higher than €60,000-€80,000," he added

Britons have lost a substantial proportion of their purchasing power, "so they are waiting", he said.

Tourism chiefs, meanwhile, are crossing their fingers that Britons – 15 million of whom enjoyed stays in France in 2008 – will not cancel their holidays across the Channel this year.

Martyn Sumners, chief executive of the Association of British Travel Organisers to France (ABTOF), said initial indications of bookings for 2009 are encouraging, although people are clearly tightening their belts.

"People are actually moving from hotels to self-catering, so that you have more control on your own budget," he said.

"I think the impact of the euro for people travelling to France is not going to be quite as bad as it would have been for people travelling to other places in Europe where you have to fly," he said.

Ski holiday bookings have been helped by exceptional snowfalls in the Alps this winter, he said.

Forecasts by the Foreign Office and the travel industry federation ABTA suggest that France and Spain will remain the biggest destinations for British travellers this year despite the unfavourable exchange rate.

But destinations outside the 16-nation eurozone, such as Turkey and Egypt, will likely see a surge in British holidaymakers this year as Britons seek cheap sun and beach outside the pricey euro area.

While the weakened pound is hitting Britons' plans to travel abroad, the British tourist industry is hoping the country's relative cheapness will attract more foreign visitors – although figures so far do not reflect this.

Foreigners made 2.2 million visits to Britain in November 2008 compared with nearly 2.5 million in November 2007, the Office for National Statistics said on Thursday, possibly reflecting general lack of money for holidays.

"As expected, the benefits of the exchange rates did not have a significant impact on inbound visits during November," said Christopher Rodrigues, head of national tourism agency VisitBritain.

"We need investment from government – that will be willingly matched by the private-sector – for a campaign to remind potential travellers in the eurozone and America of Britain's new affordability and persuade them to come here now.