According to Absa’s House Price Index, residential property prices in South Africa showed the biggest year-on-year fall in 23 years in May 2009.

The report said: ‘Nominal house prices in the middle segment of the market declined by -3.6% year-on-year in May, which was the biggest price drop since late 1986’.

On a month-on-month basis, nominal house prices were -0.5% lower in May compared with April.

Jacques du Toit, sectoral analyst of secured lending for Absa Retail Bank, predicts that house prices are set to decline by a nominal 3%-4% in 2009. According to Absa’s figures, property in South Africa have reached early 2007 prices, with the average house priced at about R930 000.

Du Toit said: ‘Nominal year-on-year house price deflation, which commenced in December 2008, continued in May this year, while in real terms prices are declining on a year-on-year basis since January 2008.’

Du Toit said middle-segment house prices were down by a real -10.7% y/y in April, after declining by a revised -10.2% y/y in March, which was the biggest price decline since September 1992.