4 Dec 2009

Warning that housing market recovery may not last

9:45 pm on 4 December 2009

An economist is warning that the recovery in the housing market may not last long.

Auckland's biggest real estate firm, Barfoot and Thompson, has reported that the average sale price reached a 23-month high of $550,217 in November, and the firm's managing director, Peter Thompson, says it's a strong signal that confidence is returning.

But the principal economist at the Institute of Economic Research, Shamubeel Eaqub, says many people are no longer on long-term fixed mortgages, and interest-rate rises will have a very quick impact.

He also says the job market is a lot weaker than many people realise.

Mr Thompson says he expects prices to fall away again over the next two months, with a resumption of sales and a steady pattern in the following months.

He says the market is more rational and measured than it was in the property boom in 2007 and buyers aren't being driven by fears they might miss out on a property.