Tamlyn Stewart

Tamlyn Stewart

South Africa's residential property market had its worst year in 12 years last year, according to the Standard Bank Residential Property Gauge released yesterday.

The bank reported that the median house price index recorded a decrease of 3,1percent year-on-year in December, bringing the average annual decline last year to -0,3percent, the first fall since 1996.

The bank's residential property book for December 2008 shows that the smoothed value of the median residential property financed by the bank was R592000.

Standard Bank uses the median house price, which means that half of all houses are more expensive and half less expensive than that price used.

"Over the last three months applications and grants for lower income houses have virtually disappeared off our books," said Standard Bank economist Johan Botha.

Middle and lower income households are battling financially and the tightening of lending criteria by banks and other lending institutions is making it increasingly difficult to access finance.

"That's not going to change very quickly," said Botha.

The combination of slow growth, relatively high interest rates, still high debt levels and inflation will continue to impact negatively on the residential property market for the next six to nine months, Botha said.