Absa recorded the fastest drop in residential property values since November 1986, the bank said on Wednesday as it launched its April 2009 house price indices.

April 2009 saw the average nominal price of middle-segment housing declining by 2.7 percent year-on-year to R941 600, Absa said.

As was the case in recent months, house prices in April fell the most when it came to larger properties while small houses posted the smallest decline, Absa said.

"This is regarded as an indication of the strain experienced in the market for larger and more expensive properties, with buyers focusing on smaller and more affordable homes," Absa said.

Data recently released with regard to various short-term economic indicators such as manufacturing, production, mining production, retail sales, new vehicle sales and electricity production and consumption, pointed to the economy experiencing recessionary conditions.

Projections were for a contraction in the economy in the first half of 2009 before bottoming and recovering gradually in the second half of the year, Absa said.

Against this background, real gross domestic product growth for 2009 was forecast at -0.5 percent, putting pressure on employment and household income.

"In view of an expected poor economic performance this year, impacting employment and income levels, many households may remain under financial pressure despite the 3.5 percentage points worth of interest rate cuts since December last year and expectations of some further cuts in the near term."

Absa expected the housing market to continue experiencing relatively low levels of activity and downward pressure on prices until late 2009.

Sapa

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