House prices remained on a downward trend for June, Absa said on Monday.

According to its June house price index, prices dropped by 4.4 percent year-on-year in nominal terms.

In real terms (where inflation has been factored in), prices were down by 11.1 percent year-on-year in May, Absa added.

"Price deflation is expected to continue for the rest of 2009, slowing down towards the end of the year," said senior property analyst Jacques du Toit.

The lagged effect of lower interest rates and a gradual recovery in the economy in the second half of the year should lead to an improvement in property market conditions from early next year, he added.

In the first half of 2009 middle-segment house prices declined by an average of 2.9 percent year-on-year in nominal terms, after growing by 6.5 percent year-on-year in the first six months of last year, Absa noted.

In real terms, house prices dropped by an average of 10.1 percent year-on-year in the period January-May this year, after declining by 3.3 percent year-on-year in the same period last year.

"On the back of a nominal 2.9 percent decline in house prices in the first half of 2009 compared with the same period last year, the average price of houses in the middle segment of the market is back to levels last seen in mid-2007, while in real terms, prices are at their lowest level since mid-2005," Du Toit said.

Sapa

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