The US housing slump has arrived at the summer playground of wealthy Manhattanites and properties there are now a tad difficult to let, writes Daniel Pimlott

THE US housing slump has arrived at the Hamptons, summer playground of the Manhattan elite. In a sign that falling prices and home sales gluts are no longer limited to the nation's declining rust-belt cities or bubble markets, prices for gilt-edged properties in East Hampton and South Hampton have fallen sharply.

The Long Island resort towns, inhabited by some of the wealthiest and most well-connected people in the US, experienced a boom between 1998 and 2007 when home values quadrupled.

"The downturn has caught up with the Hamptons," says George Simpson, who runs Suffolk Research, a local real estate data company.

The three-month running median sales price of single-family homes in the two towns fell 19.2 per cent to $638,600 (€400,000) between December and February, according to Suffolk Research.

That is almost as much as the 19.3 per cent drop in home prices that Miami and Las Vegas (where the boom and bust in the housing markets has been most dramatic) suffered in the whole of last year, according to the S&P Case-Shiller house price indices. Holiday homes have been among the hardest hit. Last year, sales of vacation property fell 31 per cent across the US, against a 10 per cent drop in sales of homes bought to live in, according to the National Association of Realtors.

Among those caught in the housing trap are three Bear Stearns executives rushing to offload properties after the collapse of the bank, says a local estate agent.

Their properties, in the village of Bridgehampton, were listed at about $2m, $2.5m and $5m, the broker said. The priciest house has five bedrooms and a large swimming pool with a picnic table built into it. "They are just normal oversized Hamptons homes . . . everyday summer houses for these guys at Bear Stearns," said the broker. "They hit hard times and decided to cut their losses."

Agents report a mixed rental market amid a glut of properties to let. Some report falling demand, while others said falling house prices and a weak economy were encouraging people to rent rather than buy.

Rick Hoffman of Corcoran, one of the biggest estate agents in the Hamptons, said the number of homes rented had fallen by 10 per cent so far this year, after notching up a 7-10 per cent increase in the past few years.

One banker said tough times on Wall Street had prompted him to forgo renting a house in the Hamptons for the summer.

"They were asking for the same amount of rent as last year, but my financial situation has changed a lot since then," he said.

Joe Horseman, of Main Street brokers, said he was having trouble finding a summer tenant for a $200,000-a-month ocean-front property that would normally have been snapped up.

The price includes six bedrooms and near-neighbours such as billionaire ex-convict Martha Stewart and actress Gwyneth Paltrow.