You may think New York's residential market, particularly in Manhattan, would have more than a passing resemblance to prime central London. But that is not really the case, as I found out at an interesting briefing by Stribling, the top-end realtor which also operates as the Savills associate in NY.
For a start, 75 per cent of Manhattan households rent (in what is in some cases a highly regulated rental market) and only 25 per cent privately own.
Of that privately owned sector, a meagre one per cent of properties are townhouses, 25 per cent are condos (privately-owned apartments, roughly as we know them in the UK) and a whopping 74 per cent are co-ops. Technically, co-op owners buy not the individual flats but a share in the whole block (the larger their apartment, the bigger their share).
Co-ops are cheaper than condos (an average of $900 per square foot as opposed to $1150) and critically the co-op board must approve buyers, who have to reveal their full financial position and personal details - a lot more transparent than some transactions in the UK. There are also limits on the proportion of a purchase price that can be made with a mortgage, so buyers typically must place big deposits. Many investors do not even try to jump through these hoops and some others who at least try get turned down.
As a result, the number of units effectively open to investors to buy is relatively small, resales are relatively infrequent, and prices are kept under control as a result. There are also far fewer overseas buyers - about 15 per cent of purchases in prime Manhattan, compared to 50 per cent or more in prime central London.
In q1 2008 (the peak of the market pre-Lehman Brothers' collapse) there were 55 sales of properties costing over $10m; in Q4 2009 there were just 18 sales over $10m; in the third and fourth quarters of 2010 combined, there were just 25.
The relatively high regulation of sales, and the fact that most people rent, mean that prices do not move sharply. After Lehman's collapse, average Manhattan prices dropped 25 to 30 per cent, and the very top end luxury sector dropped a shocking 30 to 50 per cent.
But much of tha fall has been recouped now, and US realtors clearly believe the fact that greater regulation and more controls keep their market imore stable than London's.
I suspect London agents would dispute that. After all, prime cental areas have bounced back well from the downturn. But Manhattan realtors clearly think the long term stability and less outrageous prices are ensured by these controls. How interesting, then, that the cultural centre of free enterprise has more regulation in its housing market than does London.
In the month that a flat in One Hyde Park goes on sale for £140m, it does make you wonder whether the UK, and not the US, is now the home of the Wild West.
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