One group buying up houses the Western Cape

A growing number of investors are buying up property in the Western Cape, which has emerged as the leading region for buy-to-rent transactions.

The South African property market is showing encouraging signs of recovery, with real estate emerging as the second most popular asset class in the country.

According to the 2024 South African Investor and Banking Report, the Western Cape is at the epicentre of this promising trend.

“This is a significant development, as it reflects growing confidence in the stability and long-term returns offered by property,” said Claude McKirby, Co-Principal for Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay.

McKirby said the growing interest in property investment also indicates a broader shift in how South Africans view real estate.

“Property is no longer just a place to live; it’s increasingly seen as a means of securing financial stability and creating generational wealth, and this is becoming particularly evident among younger buyers, who are entering the market with a long-term perspective,” he said.

Data from ooba revealed that national demand for investment or buy-to-rent properties reached 13.9% of total applications nationally in Q4 2024, up from 11.8% in Q4 2023.

The Western Cape’s contribution to this trend is undeniable, with the region accounting for a significant portion of investment property transactions.

The province has emerged as a hotspot for investment buyers, with 34% of all bond applications received by ooba in the region in the final quarter of 2024 being for investment properties.

This is a notable spike compared to 29% for the same period the previous year.

The Eastern Cape also registered strong growth in investment demand during the final quarter of last year, rising from 14% of all applications in Q3 2024 to 18% in Q4 2024.

Property investment boom

“This shift is driven by the dual appeal of property as both a high-return investment and a reliable safeguard against financial losses and further fuelled by strong demand for rental properties in most areas,” McKirby noted.

“Another contributing factor is the affordability of sectional title homes, which make up around 60% of investment purchases.”

“These properties are particularly appealing to first-time investors, who often opt to rent out their purchases while continuing to rent their own homes.”

According to Rhys Dyer, CEO of ooba Home Loans, 10% of first-time buyers are now purchasing property for investment purposes, which is a stark contrast to the 4% recorded in 2014.

Dyer explained that this underscores a growing awareness of property as a tool for building generational wealth.

Increasing competition due to semigration and foreign investment, combined with an undersupply of properties and high property prices, had led to an increase in tenants in areas like the City Bowl, Atlantic Seaboard, and Southern Suburbs.

McKirby explained that the Western Cape’s dominance in the investment buyer market is a testament to both the region’s enduring appeal and the growing recognition of property as a reliable asset class.

“For investors, the province represents a unique opportunity to capitalise on a thriving rental market and stable property values and for first-time buyers, it offers a pathway to financial security and generational wealth.”

“And in a time of economic uncertainty, the resilience and appeal of property as an asset class provide a beacon of hope for investors and homeowners alike.”

As the South African property market evolves, one thing is clear, McKirby said.

“The Western Cape is leading the charge, setting the standard for investment potential in the years to come, and as more South Africans embrace real property as a tool for wealth creation, the demand for investment properties is likely to continue its upward trajectory.”