South Africa’s millionaire coastal town has a property problem

Plettenberg Bay’s property market is dominated by high-value homes, with over 75% valued above R3 million, with retirees, remote workers, and holidaymakers driving this demand.

However, this surge has worsened the affordable housing shortage for local workers and led to inflated seller expectations, with many properties failing to achieve asking prices.

This is according to data from Lightstone, which revealed that 420 (7%) of homes in Plettenberg Bay (Plett) were valued at more than R10 million.

Plett forms part of the Garden Route on the eastern border of the Western Cape, South Africa’s most expensive province in terms of property prices.

Hayley Ivins-Downes, Managing Executive Real Estate, Lightstone Property, said there were 5,700 properties outside the townships, with an average value of R4.9 million.

Almost 40% of these properties had been bought within the last five years as Plett’s popularity increased with remote workers, retirees, holidaymakers and working people from other provinces searching for a more relaxed lifestyle.

However, Ivins-Downes said the strength of the market above R3 million has had consequences for those whose earnings restrict home ownership to affordable levels.

Housing for those who work in Plett’s hospitality sector, banks, shops and municipality remained a challenge. For those earning less than R26,000 a month, there was a dire shortage of formal housing opportunities.

Plett’s property values have been driven by demand from the leisure and retirement markets, and more recently by professionals who work remotely.

Ivins-Downes said one in three natural persons who owned a home in Plett also owned one elsewhere in the country, mostly in Gauteng or the Western Cape. More than half of those who owned a home in Plett were 60 or older.

Just as Plett had a high proportion of homes valued above R3 million, it also had a high proportion of homes (36%) in estates and sectional schemes (21%) for properties valued at more than R1 million.

This is more than the national averages of 18% of homes in estates and 18.5% of sectional scheme properties in this price bracket. Freehold homes accounted for 43% of properties in Plett.

High prices and higher expectations

The average sectional scheme values in Plett were just under R3 million. The average freehold values were R6.5 million for properties inside estates, and R5 million for homes outside estates.

Of the Estates, Ivins-Downes said Whale Rock Ridge had the highest average value at nearly R11.5 million. This was followed by Brackenridge Nature Estate at R8.2 million and Schoongezicht Country Estate at R5.6 million.

House prices were generally higher in suburbs with a view of the ocean or those close to it. Houses in Keurbooms Lagoon had the highest average value, although there were relatively few properties.

Lower Central Plett was next in terms of average property value, while Formosa and Robberg Ridge had the lowest property values of the 21 suburbs analysed.

Ivins-Downes said most properties were in Seaside Longships, where the average value was just above R5.3 million.

The data from 2024 onwards suggested that many Plett sellers entered the market with inflated expectations, and seldom got what they initially asked for.

In fact, Plett properties were the least likely in the Garden Route to achieve their asking price, behind Mossel Bay, George, Knysna and Sedgefield.

According to a poll by Lightstone’s associate company, PropData, estate agents said they corrected a buyer’s pricing expectation either “often” or “almost every time” in more than 85% of instances. In only 1.2% of interactions, estate agents said they did not correct a buyer’s pricing expectation.

Ivins-Downes said if Plett properties didn’t sell within the first three months on the market, the drop-off in price paid relative to the asking price could be significant.

“The average price paid on transactions concluded within a month was 91% of the asking price, but this dropped to 82% if sales took six to 12 months to conclude.”

“By comparison, George, Jeffreys Bay, Mossel Bay and Sedgefield all achieved a better average price on transactions in the first month being on the market, while neighbour Knysna’s average was the same as Plett’s.”