Sarkozy is insisting that his property transactions have all been squeaky clean. But whether or not the Canard's claims of corruption are founded, the fuss around his luxurious duplex apartment will damage his attempts to reposition himself in the presidential campaign as an outsider from the establishment and a man of the people.

Ordinary French people do not sell flats for over a million euros, as the Sarkozys did in 2006, making about a 100 per cent profilt over a decade, according to the Canard. The Sarkozy housing story will feed the popular view that all French politicians are involved in sleaze of some kind. The view is fed by the fact that so much of the political caste is lodged at the expense of the state or town councils, as ministers, mayors or holders of other high office.

Segolene Royal, the Socialist candidate, is being careful not to seize on the affair, however. If there is any whiff of a suggestion that the Socialists were behind the Canard story, it would backfire on them. Royal is also not above suspicion herself. She was forced to admit in January that she and Francois Hollande, the party leader and her partner, paid the annual wealth tax largely because they owned three properties.

One of these, a Provencal-style villa at Mougins, overlooking Cannes, appears to be undervalued in the couple's tax declaration, according to experts quoted in the French media. Le Canard is to publish its findings on the matter next week. Royal said yesterday that she had nothing to worry about because all her transactions had been "completely transparent."

Scandals over housing are a regular feature of French political campaigns. In 1995, Jacques Chirac, then Mayor of Paris, as well as Alain Juppe, his lieutenant and future Prime Minister, were embarrassed when it was revealed that they were living in grand Paris flats that were heavily subsidised by the city council. The subsequent row forced Juppe and his children to leave their city-subsidised flats. Chirac and his team were not harmed by the row. He moved to the Elysee Palace as president.

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