Falling Prices In London and Manhattan Luxury Real Estate

by Deidre Woollard (RSS feed)
Jan 11th 2009 at 7:02PM

A recent article predicted continued gloom for the California real estate market this year but two other expensive markets are also in peril. The high-end market in Manhattan, once believed to be impervious to economic doom, spent the last quarter of 2008 catching up to the rest of the world. Properties that once would have been snapped up in days for a price close to list have now sat on the market for months and faced deep price cuts. A report from Prudential Douglas Elliman reveals that the median sales price of a luxury apartment (defined as the top 10 percent of the market) fell nearly four percent to $4.02 million in the fourth quarter of 2008 compared to last year. The top of the market is likely to continue to weaken as the fallout from failed banks and Wall Street firms continues to be felt. Our Sunday real estate round-up continues to show buying from financial fat cats but many are trying to sell their apartments for readily available wealth. StreetEasy.com says that almost 42 percent of the 259 Manhattan homes currently listed for $10 million or more came on the market since September. What affects Manhattan also affects the Hamptons with vacation and second homes searching for buyers that may be less ready to invest in something for pure pleasure.

It's not much better across the pond. Bloomberg reports that luxury home values in London's nine most expensive neighborhoods fell almost 17 percent last year. Like New York City, London is a big financial center and the loss of jobs in banking, finance, insurance and related industries is having a big impact on the market. The real estate brokers at Knight Frank report that the number of houses and apartments sold for at least 1 million pounds last year fell 49 percent from 2007's record number. Overall it is predicted that London luxury housing values could fall by 30 percent by the time the real estate slump hits its inevitable bottom.

It won't last forever, financial sectors will be strong again, real estate will rebound and likely go higher than ever in several years in these two locations. But for now, those with a little money left over just may have a chance at getting good real estate value in these two often inflated markets.

Tags: london, manhattan, new york city, NewYorkCity, real estate, real estate prices, RealEstate, RealEstatePrices

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William Jan 12th 2009 11:36AM

Ehh its more of a 'market correction' in London, and the rest of the UK. Many towns surrounding London actually report higher property values because more and more Londoners decide to go for a longer commute.

Property everywhere here was and still is overvalued, partly because of the property surveyors (who get paid more if they can artificially inflate the numbers). Traditionally, developers have a 30% margin, but many developers were reaching 100% before the credit crunch as they took advantage of the ultra-inflated house prices.