France

Thanks to its inimitable style, pleasant climate and wonderful food and wine, France has long been Europe's most popular tourist destination and a firm favourite with British second home owners. Increasing numbers of people now buy a holiday home with the hope of renting it out at least for a few weeks a year to help cover costs; for a smaller number, income and capital gains, rather than the desire to own a home in France, are the principal motivation. Certainly, anyone who has bought over the last few years will be sitting on substantial capital gains. The market has been rising sharply since 1999: apartment prices in the third quarter of 2005 rose by an annual 16.2%, with houses up 13.4%. Prices cannot keep on growing at that rate for ever, but the upturn looks to be more solid – and less “bubble-like” – than in Spain. The situation with rentals is more complex, especially when it comes to targeting the holiday market. Rather too many people have had the idea of buying a cheap rural property, renovating it lovingly and renting it out to fellow Britons. Put simply, there are just too many gîtes chasing too few punters. There is still money to be made, but you have to take care in choosing your property.

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