Property prices in South Africa fell by -1.3% in January according to the Standard Bank Group, and house prices fell by -2% compared to December 2010.

The median house price is now R568,000, (£49,000). Property analyst Johan Botha told local press: “We believe that a further slowdown in the house price over the next few quarters is on the cards.”

The year-on-year growth rate increased at a slower rate of 2.3%, compared with 3.6% in December. The most recent peak in the median house price of 8.3% year on year was in September 2010.

Botha said that with the economy battling to gain meaningful traction, the high debt levels of households, and a struggling labour market, the residential property market was unlikely to flourish.

However, according to the January 2011 FNB House Price Index, property price growth in South Africa was only 1.4% year on year.

It reported: ‘The slowing year-on-year growth rate in the average house price remains largely driven by weak demand growth, which in turn is the result of, firstly, a weak economy and its constraining effect on household income growth and, secondly, the high levels of household debt relative to disposable income. But strong residential supply, an overhang from the building boom of a few years ago as well as high levels of financial pressure related selling also plays a key role.’

The two interest rate cuts in late 2010 appear to have done little to halt the declining trend in house price growth so far.