Wall Street fall out now hitting property prices in Manhattan

Apartment prices in Manhattan have fallen for the first time since 2002, according to the latest figures from appraisers in New York.

The average price fell 18.5% in the second quarter of 2009 compared with a year ago, the data from New York appraiser Miller Samuel and broker Prudential Douglas Elliman Real Estate show. The median price is now $835,700.

The number of sales of residential property have also plummeted, falling 50%, the steepest decline since Miller Samuel began keeping data in 1989. Analysts say it is the fall out from the collapse of Lehman Brothers and Bear Stearns that is now being felt in the real estate market.

Private sector employment in the city has fallen 2.8% with some 91,200 jobs being lost with Wall Street losses and asset writedowns reaching $1.4 trillion.

Sellers are having to drop their prices considerably if they want to find a buyer. About 32% of second-quarter listings included discounts from the original asking price, according to StreetEasy.com, a website that gathers Manhattan property listings from brokers.

The biggest discounts were on Central Park South and in the Financial District, where list prices were down by an average of 10%. 'The sellers who want to sell are reducing their prices. The ones that aren't, are either sitting on them overpriced or waiting for another day,' said Pamela Liebman, chief executive of New York based property broker the Corcoran Group.

An example is an apartment in the Upper West Side which was put on sale in February 2008 for $6 million. When Bear Stearns collapsed the asking price dropped to $5.75 million, then to $4.96 million. It eventually sold in April 2009 for $3.6 million, a 40% discount from the original asking price.

While property prices have been falling across the US since 2007, Manhattan held up in part because of luxury developments that sprouted up and were planned during the housing boom.

Brown Harris, Halstead and StreetEasy said in separate reports that median prices dropped 19% from a year earlier. The Corcoran Group put the decline at 13%. It is the higher priced properties that are suffering the most. Buyers in higher price brackets are struggling to obtain mortgages for more than $729,750, the limit on home loans that federally controlled mortgage buyers Fannie Mae and Freddie Mac can purchase or guarantee.