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Last Updated: Tuesday, 4 October 2005, 20:55 GMT 21:55 UK
Manhattan flat prices post slide
The Empire State building seen at sunset in New York
Famous landmarks add to the allure of living on Manhattan island

New York and London are cities with business links that go back centuries and it seems the ties are now even extending to the property market.

The latest real estate figures out of Manhattan show that the average price of a flat has fallen and brokers are questioning whether the market has peaked and a correction is on the way.

According to the Prudential Douglas Elliman Manhattan Market Overview report, the average price of an apartment fell to $1,149,813 (653,420) in the three months ending 30 September.

That is down almost 13% from the previous three-month period and brings to an end a period of growth that had seen prices jump in the first six months of this year.

"My sense is the buyers are saying: 'No more. We want a price correction,'" said Jacky Teplitzky, executive vice president of Prudential Douglas Elliman Real Estate.

Ms Teplitzky estimates that the market is overvalued by about 10% at present levels.

'Spotty market?'

Even so, it may be too early to talk of a correction despite the signs that consumers may have lost their appetite for increasingly expensive apartments.

On an annual basis, the average flat price was 10% higher than in the same period a year earlier.

Apartment block on 5th Avenue, New York
They may not look much, but flats in Manhattan are hard to come by

"We're not seeing prices fall," said Jonathan Miller, author of the latest report.

"What we're seeing is more entry-level sales and a more moderate appreciation of property than we've seen in previous quarters."

Per square foot, prices rose 1.4% to $984 in the third quarter from the second and were 23% higher than a year earlier.

Driving sales during the third quarter was demand for studio and one-bedroom flats, while the turnover of luxury apartments fell, bringing down the average price, analysts said.

Overall, the total number of sales in Manhattan dropped by almost 9% in the quarter, down 18% from a year earlier.

It was taking longer to sell flats as well, with the average time on the market rising by a third to 133 days.

"I hear some of the brokers say it's a very spotty market," said Sharon Baum, senior vice president of the Corcoran Group.

"I don't really agree with that. It comes down to price."

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