Cape Town’s property headache
There are growing concerns that Cape Town is becoming unliveable for locals, with foreign digital nomads driving up rental prices across the city and effectively pricing out residents.
However, property economist at FNB John Loos explained that other factors have historically driven up property prices in Cape Town and that its good governance relative to other metros has only exacerbated the rise in the cost of housing in the city.
Cape Town has a very long history of higher property prices compared to other cities in South Africa due to the land shortage in Cape Town.
The city has the ocean on many sides, a mountain in the middle, and valuable farmland on the outskirts.
There are many players in the Cape Town property market driving up demand, including digital nomads, semigrants from upcountry, and tourists.
“The inflow of people from the rest of the country is probably more a big driver of overall demand in the Western Cape and possibly putting upward pressure on values than foreigners,” Loos explained.
Cape Town mayor Geordin Hill-Lewis said digital nomads in South Africa are moving into accommodation at the “very, very, very top” of the property market.
According to the Minister of Home Affairs’ new visa requirements, these remote workers must earn at least $40,000.
Whilst reliable statistics are not available for the digital nomad housing market, substantial investments have been made in Airbnb properties in Cape Town.
Loos said that limiting the Airbnb supply is ill-advised because of the large role tourism plays in Cape Town’s economy and the larger South African economy.
Harcourts property specialist Joshua Parsons said areas like Green Point along the Atlantic Seaboard and Gardens in the City Bowl are particularly popular with remote workers.
Landlords in these areas shifted to short-term rental models because they offer higher returns, which helps them meet their bond repayments.

Some digital nomads and semigrants buy property to lease as an Airbnb while they are away.
The good governance in the Western Cape, particularly the councils, has also led to greater investor confidence.
However, the housing lobbying group Ndifuna Ukwazi has called for the City of Cape Town to impose rental controls to make it more affordable for people to live in the inner city.
Loos warned that caps on various prices normally create shortages. Higher rental prices across the broader Cape Town area will ultimately lead to more property investment and development.
StatsSA’s provincial building statistics show that despite the Western Cape’s population being less than half of Gauteng’s population and its economy being much smaller, the Western Cape’s residential building activity is similar to that of Gauteng.
To Loos, densifying residential areas, reducing transport costs and creating new nodes of economic growth closer to where people live would be the ultimate solution to Cape Town’s housing problem.
Economic activity is centred in the Cape Town CBD, with some neighbourhoods in the Cape Flats and along the outskirts of the city being dormitory towns with little economic activity.
“We know we’ve got a housing shortage. We just know by looking at the number of informal settlements around,” said Loos.
“A big part of the reason we have a housing shortage is because a lot of people just don’t have jobs.”
At the same time, higher employment rates often increase property values because people can afford better housing.
Loos said Cape Town locals are likely also driving up demand. “The City of Cape Town is probably outperforming much of the rest of the country, so purchasing power growth is on the up there.”
The Western Cape has the lowest youth unemployment rate in the country at 29.9%
However, housing prices’ annual growth was 7.7% in the Western Cape, whereas the City of Cape Town municipality saw growth of 5.7% in the most recent reports from StatsSA.
These are still the highest residential property price increases in the country.

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