Every fortnight or so, residents of Manhattan's large apartment buildings find a familar card in their mailbox, among the higher energy bills and rising credit card invoices. “Hi,” it reads, “here at Realty Corp we have just sold an apartment in your building for the record sum of $X million.”

There is a series of contact details, should one be tempted to sell one's own flat. Even discounting the hype, there seems little hard evidence to suggest that the Manhattan property market is being infected by the malaise in the rest of the US. Low supply, high demand and two exclusive apartment developments - which have fetched among the highest property prices in the world - have all colluded to keep the Manhattan residential market buoyant.

Gregory Heym, chief economist at Brown, Harris, Stevens in New York, says: “There is no weakness at all here. Average and median prices in Manhattan in the fourth quarter of 2007 were significantly higher than for the same period the year before, and inventory is low.” The numbers (the average apartment price in Manhattan in the fourth quarter was $1.43 million, up 34 per cent compared with the same quarter in 2006) were skewed by the 15 Central Park West and Plaza developments. Average apartment prices in the pair hit about $7 million each.

Heym argues that even ignoring the impact of these two blocks, which would reduce the average Manhattan apartment price by about $500,000, values are still higher than the year before. But the view from Heym's office window is perhaps restricted to the super-rich who can ride every recession; it seems to exclude the Fifth Avenue retailers whose Christmas trading revealed how grim the finances of many aspirational Middle Americans have become.

While he insists that the Wall Street traders, brokers and hedge fund managers will continue to drive demand with their bonuses, a number of redundancy programmes have started. The big investment banks have cut thousands of jobs and Citigroup, the world's biggest, has signalled a 4,200 reduction in its workforce.

The residents of the penthouses of 15 Central Park West and The Plaza can barely see across the Hudson to New Jersey. There begins the rest of America, suffering the worst property recession for 17 years. In some states prices have fallen by as much as 40 per cent in the past two years. The most recent official data appears to show that the market remains stagnant, with Americans unable to sell their homes even with a sharp discount.

RealtyTrac, the US foreclosure monitors, said this week that foreclosures nationally had risen 72 per cent over 2007 compared with 2006, as homeowners struggled to keep pace with rising mortgage payments. Repossessions will only increase the homes glut.

And Kevin Logan, chief economist at Dresdner Kleinwort in New York, forecasts a continuing slide in 2008. “This is far from over,” he said.

NEW YORK FACT FILE

$1.43million: average price of a Manhattan apartment in the fourth quarter of 2007, 34 per cent up compared with the previous year

Sales of Manhattan apartments over $10 million more than tripled compared with the same period in 2006

$1,764: average price per sq ft of a Manhattan four-bedroom apartment in the fourth quarter of last year

$1,042: average price per sq ft of a one-bedroom apartment in Manhattan

Source: Brown Harris Stevens, Manhattan property report for the fourth quarter of 2007

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