House price growth is at an eight-and-a-half year low, April results for the Absa House Price Index released on Thursday indicate.
"(In April) house price growth slowed to a nominal 6.8% year-on-year in the middle segment of the market," said ABSA.
This was down from a revised 7.8% in March.
"It was the fourth consecutive month of single-digit growth in nominal house prices since a growth rate of 11.2% was recorded in December last year.
Absa said April's 6.8% growth was the lowest since November 1999 when growth was 6.5%.
The average price of a middle-segment house was now brought to about R974 000 in April this year.
House prices in the middle segment of the market dropped by 2.5% year-on-year in March, compared with a 0.9% decline in February.
"This was the biggest negative real year-on-year growth rate recorded in house prices since May 1997.
The real price of a middle-segment house has dropped by a total of R19 700, or three percent from August last year's an all-time high of around R651 500.
The real price of a middle-segment house now stands at about R631&nbskp;800 in March this year.
Absa said factors affecting the house prices including sharply rising CPIX inflation, the rand exchange rate, food price trends, interest rate hikes and a significant slowdown in the growth of real household disposable income in 2007.
The full implementation of the National Credit Act in mid-2007 was also having a negative effect on the affordability of housing.
"These trends have caused the focus of home buyers to have shifted from luxury, large and expensive properties to smaller and more affordable properties in recent times."
Absa said house price growth was forecast to slow down even further during the rest of 2008 from current levels.
Nominal price growth of well below 10% is projected for the full year.
"Real price growth is expected to be in negative territory, which will be the first annual drop in real prices since 1999, when it was -0.3%," said Absa.