New York is surpassing London as the property investment capital of the world once again. New developments on prime real estate in the Big Apple are commanding eye-wateringly high prices and attracting international buyers in their droves.
Richard Wallgren, executive vice president (sales and marketing) of Macklowe Properties, which is currently selling an exclusive range of luxury penthouse apartments priced from $7m (£4.5m) to $95m at 432 Park Avenue in Manhattan, has noticed a turnaround in the past 18 months: "The resurgence in activity coincided with the supply of new super-luxury inventory. Following the 2008 economic crisis, there was a paucity of new construction in Manhattan.
"Beginning in 2012 and carrying on into 2013, there has been the release of a new residential beginning, with One57 [in Manhattan] followed by 432 Park Avenue and 737 Park Avenue."
As in London, it is the classic areas of Manhattan that are proving appealing. New developments within a stone's throw of Central Park and the financial district are achieving sales rates of above $5,000 per square foot, which makes Mayfair look decidedly down at heel.
But importantly, unlike London, it is not just overseas buyers who are looking at buying. In fact Mr Wallgren estimates that two-thirds of his buyers are domestic, and this reflects a general feelgood factor around the US property market.
It is ironic that American real estate, which played a central role in the crashing of the world economy in 2008, is now helping to lead the world's biggest economy away from the economic danger zone. Mortgage arrears are now back to pre-crash levels, according to the ratings agency Fitch. In prosperous Dallas and Denver, prices have risen by 7.6 per cent and 9.7 per cent respectively in the past year –above their late 2006 levels, according to a survey by Standard & Poor's. What's more, nationwide transaction levels are on the up – a very good indicator of normality returning. (In the UK, by contrast, property transactions are still only running at half their pre-crash level, suggesting that the headline rate of house price increases may be a little misleading.)
Some parts of the country are positively booming, and not just upmarket New York. In Florida, the latest figures from the Miami Association of Realtors show 19 months of continued house price growth in the county of Miami-Dade. The association's president, Fernando Martinez, reports that in some cases multiple buyers are vying for homes. "Properties that are competitively priced will sell very rapidly, particularly in the lower price points, and will generate multiple offers close to or above asking price," he said. "Miami real estate is definitely thriving."
What's more, 60 per cent of house purchases in Miami are being made in cash. This indicates that the crucial conveyor belt of retirees from the rest of the US, who sell their property in their home towns, release equity (and are therefore cash buyers) and then move to Miami, is once again operating in the traditional way. This doesn't just underline the appeal of Miami but indicates business as usual in the property market for much of urban America. Across the US, property prices are up 7 per cent, while transactions are 15 per cent higher.
Behind this resurgence is a healthier economy. Unemployment has stopped rising and annual economic growth is pushing 2 per cent again. The Federal Reserve has been printing vast amounts of money and encouraging mortgage lending at what have been, until quite recently, historic low interest rates. Specific schemes such as the Home Affordable Refinance Program and Home Affordable Modification Program have helped to reduce the number of American homeowners in negative equity, releasing shackles from the market.
However, in the crucible of the world financial crisis – industrial (or post-industrial) areas such as Detroit – there is still little sign of this property market recovery. Thousands of foreclosed homes still lie empty, often stripped of their copper wiring by opportunistic thieves. The areas that attracted the biggest number of "Liar Loans" (self certification) and bogus mortgages dubbed "Ninja – no income, no job – may not see any trickle-down benefits for a generation.
However, there are exceptions, even here. "There are a lot of homes that are run-down and vacant. Those homes – you could sell them for $1 all day long, because no one wants to buy them, nobody wants to live there," said Chris Stead, director of Property Investment House, which specialises in attracting buy to let investors into run-down areas.
"If you want to make money in the Detroit market, or wherever you buy, it's about the location. Certainly, the houses that we offer are good houses on good streets in good neighbourhoods. When we advertise them for rent, we get 20 to 30 phone calls from people wanting to live there."
And from an investment returns perspective, areas like depressed Detroit (the city has recently filed for bankruptcy) do offer a compelling case as property is comparatively cheap but yields, because of an under-supply of good-quality rental accommodation, are potentially good – sometimes above 10 per cent a year.
However, any British investors looking to make such returns have to be aware that they may not to be able to sell up if they need the cash. The US house price recovery, although striking and more broadly based than in the UK, is still built on shaky economic and fiscal foundations.