South Africa's residential property market is at a five-year low point on a number of measures, in a difficult economic climate, a First National Bank survey showed on Monday.

The quarterly review, which measures property sentiment and activity, found the market sluggish at 4.42 points on a scale of one to 10, the lowest since the bank began the index in 2003.

"The results from the second quarter 2008 illustrate that more than a fifth of sellers are downscaling (prices) due to financial pressure ... the latest levels show that 85 percent of sellers are unable to meet their sales target," read the report.

FNB property economist, John Loos said the barometer painted a dismal picture of the country's property makert.

The slowing economy

"The drop is influenced by a host of factors, including high interest rates, inflation and the slowing economy. Things are likely to get worse before they get better by the second half of next year," said Loos.

The demand driven rental market is the only segment that has kept an active momentum in the market.

"Rising economic pressures are resulting in fewer serious buyers viewing show houses, continuing to drive down market confidence," read the report. House prices had peaked in September 2004, and had since then been declining steadily.

AFP