Goodbye Cape Town – reverse semigration trend hits South Africa

Soaring rents and a severe housing shortage in Cape Town are driving tenants to leave the Western Cape for more affordable provinces, and experts warn that rent control could worsen the crisis.

The topic of overpriced property in the Western Cape recently came ot light when two Cape Town apartments gained attention on social media.

The first, a modest apartment in Green Point, was going for R22,000 per month. Another small unit in Durbanville was advertised for R16,000, despite needing repairs and having broken kitchen appliances.

According to nearly 80% of rental agents in PayProp’s 2025 State of the Rental Industry report, affordability concerns like these are a key reason tenants are relocating from the Western Cape.

“Even more concerning, the vast majority of South African households (80%) are priced out of the formal housing market because their monthly income is under R26,000,” said Renier Kriek, managing director of Sentinel Homes. “We have an undersupply of about three million formal housing units.”

Cape Town is particularly pricey, with average property sale prices increasing from R1.6 million in 2020 to R2.1 million in 2025.

In contrast, Lightstone reported that Johannesburg’s prices have remained relatively flat over this period, averaging between R1 million and R1.5 million.

“Obviously, the higher capital values mean that people who buy for investment require a higher nominal return, which means the rents go up,” Kriek said.

This has been happening in the Western Cape, where the PayProp Rental Index shows 9.6% year-on-year rental growth and average monthly rents reaching R11,285 in Q1/2025.

This is significantly higher than Gauteng’s R9,201, KwaZulu-Natal’s R9,170, and the Eastern Cape’s R7,330. As a result, calls for rent control in Cape Town have been increasing. The idea is to cap rent increases to make housing more affordable.

However, while this may win populist votes and provide short-term relief for tenants, Kriek said it won’t fix the housing shortfall.

Rent control puts tenants and investors at risk

Kriek pointed out that rent control has been unsuccessful in cities like New York, Berlin, Stockholm and Tokyo. While rent control impacts the entire property market, it ironically hits hardest in the low-income group, which should benefit the most.

“Rent control leads to underinvestment and poorly maintained units as landlords have limited incentives to maintain or expand their rental stocks because their profits are capped,” Kriek said.

Another problem is misallocation, where some tenants stay in rent-controlled units even when they no longer match their needs.

Blocking the units for people who genuinely need them creates an inefficient housing distribution that worsens the undersupply further.

Kriek said that although ample private sector money is available to invest in rental housing, the government needs to change the market design that makes this segment unprofitable. Small units are more expensive per square metre to build – and sell – than larger ones.

In addition, he said, tenants in affordable units, priced under R7,000 rent per month, are more frequently in rent arrears than higher-income tenants as they feel economic pressure harder.

The number of “squatting” tenants, who haven’t paid rent for three consecutive months and are still occupying the property in the fourth month, is also increasing. The TPN Squat Index rose from 3.48% in Q4/2023 to 3.71% in Q2/2024.

According to Kriek, the balance of power is unduly tipped against landlords and needs to be levelled. “The law that governs evictions, the Prevention of Illegal Eviction and Unlawful Occupation of Land Act (PAI), isn’t fit for purpose.”

“It was designed to evict land squatters, but due to poor drafting, it also applies to the eviction of tenants who don’t pay their rent or refuse to move out when legally required.”

This makes the process unnecessarily expensive, time-consuming and open to exploitation. Kriek added that, historically, eviction is a sensitive topic in South Africa.

“But if we don’t allow strict enforcement of payment obligations, then landlords won’t invest in rental housing, which is the easiest and the quickest way, using the least amount of government resources, to fix our housing undersupply.”