French real estate professionals have reported that sales volumes have collapsed of late with the French national real estate federation (FNAIM) reporting a 15% fall in sales in Q1 2012, while Century 21 posted a decline of 171%.

So far, prices have not been too badly affected and Century 21 reported a decline of 2.6% on average for French property while FNAIM reported that prices were stable.

However, further problems could lay ahead for the French property market as the new French President Francois Hollande is reportedly preparing to introduce retroactive social charges on British and other ‘non-resident’ second home owners in France in an effort to reduce France’s large budget deficit.

At least 200,000 Britons own second homes in France in areas such as the Dordogne but on the 4 th of July the French government announced it was to increase taxes on foreign-owned second homes. Tax on rental income would rise from 20% to 35.5%, and capital gains tax on property sales would rise from 19% to 34.5%.