Two-tier vs one-tier property markets

It always used to be said that there were two French property markets. The ruined, rural properties for the English, and new properties for the French.

Now I don't actually think that's true. Not any more. My partner and I belong to Maisons Paysannes de France - an organisation devoted to teaching home owners how to repair and maintain their period properties in an authentic way. It seems to be quite popular in France and we've found a number of tips on where to get the right building supplies and how to insulate old houses without ripping them apart.

And all the country houses round us are occupied by French families. (Though our next door neighbour supported Italy in the World Cup Final. We are still talking. Just.)

True, young French couples tend to live in towns. But that doesn't mean they're not interested in a house in the country. It just means they're interested in jobs. For the time being. But as in England, I notice a lot of downshifters moving out of Paris - lawyers near us who work three days a week in Paris, for instance, and two days at home.

So I'd reckon France is really a single tier property market - any house could sell to French or English buyers.

Germany seems to be a completely domestic market. That may be why it's also primarily an investors' market, with most UK buyers looking to rent out apartments in Berlin rather than live in the Black Forest or run a gite in a Bavarian castle.

What slightly worries me are the number of completely two tier markets. Spain is an obvious example; there are whole areas where Spaniards never seem to venture. Turkey is even more differentiated; Turks buy in Bodrum, the Brits buy in Bodrum and Fethiye, and the Germans buy in Alanya. (The beer's usually better in German-frequented areas.)

Many of the emerging markets are two-tier. Kiev, capital of Ukraine, has become like Mayfair - most people in the country can't afford to live there! So the resale market is purely to other foreign investors - there's relatively little domestic demand (though there are quite a number of very rich locals - as in Moscow - there's not much wealth below that level). Morocco may be going this way - lots of beach apartments far away from any jobs but close to a golf course.

Is a two-tier property market always a bad thing? Not necessarily. It's an example of market segmentation - a classic strategy and one which works.

But if the UK property market starts looking sick, I wonder whether some of the two-tier property markets will catch the contagion. Right now, I suspect pure investors might be better off with German or French city apartments than a ski chalet in Bulgaria or a golf resort in Morocco.