Nominal house price growth slowed further in May this year to a level of 4.3 percent year-on-year, the lowest price growth since late 1999, Absa said on Thursday.

This was down from a revised 5.5 percent in April and brought the average price of a middle-segment house to about R960 700 in May.

However, in real terms, house prices in the middle segment of the market dropped by 5.0 percent y/y in April 2008, compared with a decline of 3.4 percent y/y recorded in March, based on headline CPI inflation.

"This was the biggest real year-on-year drop recorded in house prices since March 1997, when it was at a level of –5.2 percent y/y, based on nominal price growth of 3.9 percent y/y, and a headline CPI inflation rate of 9.6 percent at the time," Absa said.

On a month-on-month basis, revised nominal house price growth was negative to the tune of 0.1 percent between March and May this year, which was the first nominal month-on-month price drop since January 1999.

As a result, the average nominal house price has declined by about R4000 over the past three months, Absa said.

In real terms, house prices dropped by a further 1.9 percent in April from March.

The real price of a middle-segment house has dropped by a total of R37 200, or 5.7 percent, from an all-time high of around R651 600 in August last year to about R614 400 in April this year.

Sapa