In the face of South Africa’s strenuous economic conditions, characterised by a 5.9% consumer inflation rate and notably high interest rates (with the repo rate at 8.25% and the prime lending rate at 11.75%), the housing market’s resilience emerges as particularly noteworthy. A recent Residential Property Price Inflation (RPPI) report covered eight major municipalities across nine provinces showing metrics to evaluate changes in residential property prices. This report includes all types of residential properties purchased by private individuals.
Johannesburg has seen the slowest increase in property prices since 2010, with an average rise of 71% over the last 23 years. In contrast, the overall average increase in property prices across all metros is about 98%. Notably, Cape Town has experienced a 141% increase in property prices, significantly outpacing other regions.
The Western Cape’s population has seen remarkable growth, as highlighted by the Census 2022 results. Over the past decade, there has been a significant 27% increase in the population, bringing the total to 7.4 million. This is largely attributed to the semigration trend, which is expected to continue. The Western Cape Premier Alan Winde predicts the population could reach approximately 8 million by 2030. The Western Cape’s attraction can largely be attributed to the region’s strong governance, as evidenced by the latest Auditor General’s report for the 2022/2023 financial year. The report showcased outstanding results, with all 14 provincial departments and 11 entities in the Western Cape receiving a 100% unqualified audit outcome, further reinforcing the province’s efficient administration.
StatsSA’s breakdown of the metros reveals the following increases in property prices (over the last 23 years):
| Average Across All Metros | +98% |
| Cape Town | +141% |
| Ekurhuleni | +94% |
| Tshwane | +91% |
| Buffalo City | +89% |
| eThekwini | +80% |
| Nelson Mandela Bay | +77% |
| Mangaung | +72% |
| Johannesburg | +71% |
Commenting on the Western Cape’s property boom, Grant Smee, CEO of Proptech and digital agency Leadhome says. “It’s fundamentally about supply and demand. While homeowners struggle to sell properties in Johannesburg at discounted rates, Cape Town, particularly, faces relentless demand, driving up prices. In some instances, properties in Cape Town are priced up to 50% higher than those in Gauteng,” he explains.
Tabane Ramasala, Commercial Director of property development group, Merelava, observes a distinct trend, noting, “This pattern is unmistakably real. The Western Cape and East Coast are particularly appealing to the retired demographic who have spent their careers and accumulated their wealth in Gauteng’s inland regions. In line with this trend, we’re witnessing a surge in Retirement Villages offering ‘life rights’ alongside luxury services and frail care facilities.”
Ramasala also shares insights on the Gauteng property market, highlighting its current dynamics. “The importance of price has escalated dramatically with the prime interest rate increasing tenfold over a three-year period, from 7% in 2021 to the current rate of 11.75%. This puts immense pressure on consumers. The most favourable price range remains between R800k and R1.5 million,” he confirms.
Smee also highlights a trend where homeowners in areas experiencing a downward trend, such as Johannesburg, Pretoria, and the East Rand, are extending their bond terms. “Many choose to sell their fully paid-up homes, using the proceeds as a deposit and remortgaging to buy similar properties in Cape Town,” he notes. This ultimately translates to a bond or home loan over 40+ years.
The surge in Cape Town’s property market is not without its challenges. “Infrastructure and spatial planning are critical as we see densification in areas like the West Coast, Sunningdale, Blouberg, and Hout Bay. These areas are experiencing significant growth, primarily driven by semigration. We’re observing similar trends in George and Mossel Bay as well,” Smee adds.
All indications suggest that the Cape Town property bubble shows no signs of abating in the near future. While other metropoles in the country grapple with administrative issues of corruption, bankrupt municipalities, and service delivery challenges, Cape Town’s real estate market continues to flourish, bolstered by effective infrastructure and administration.
