According to French property firm Athena Mortgages, the French residential property market is stabilising as on average prices rose by +3.9% during Q2 2009, resulting in an annual return to July 2009 of -2.5%.

The company believes that much of the market’s resilience is due to the prudent lending criteria that have been in effect for many years. In France, lenders do not allow borrowers’ total outgoings on finance payments to exceed one third of their total gross monthly income. This way the bank can be sure that any change in circumstances does not precipitate immediate financial problems and that the borrower will continue to be able to make the monthly repayments.

This has allowed for a continuing availability of mortgage finance in France. While mortgage finance in the UK remains difficult to secure at higher LTVs, the French banks continue to lend to borrowers with smaller deposits, even up to 100% LTV.

The buy to let sector in France is attracting particular interest from investors at present, as price falls have boosted gross yields. The average annual gross yield in France is currently 5.6%, which compares to 5.1% in the UK as a whole and 3.79% in London, according to Athena Mortgages.