Cape Town's price tag: Can you afford the dream?

The reversal of the semigration trend to Cape Town (CPT), due to high living costs, reflects the complex interplay of factors currently influencing the South African property market. 

Initially, the allure of Cape Town's lifestyle, infrastructure, and perceived safety drove significant inward migration from Johannesburg and Durban, say Siphamandla Mkhwanazi, a senior economist at FNB.

“However, the rising cost of living (particularly in terms of property prices, rentals and general expenses) as well as the renewed drive by corporate entities to get workers back into the office, appears to be prompting a re-evaluation for some.

"It also supports the view that consumers (fresh from a cost-of-living crisis) are not fully out of the woods yet and are still prioritising affordability above all,” Mkhwanazi said.

Since 2019 Cape Town has consistently outshone Johannesburg with its rising average property prices, according to Lightstone. While Cape Town's property market has rallied post-pandemic. Joburg numbers are even below 2019 levels. Lightstone says Joburg's average residential property prices between R1 and R1.5 million, whereas Cape Town's prices are well over R2m.

Mkhwanazi said that for Cape Town, the initial influx led to a surge in property demand, driving up house prices and rentals. However, the current outflow may lead to "a softening of the market", potentially creating opportunities for buyers and renters.

Bradd Bendall, the national head of sales at BetterBond said semigration to Cape Town from Johannesburg and Durban has surged in recent years, driven by lifestyle appeal, better governance and safety.

“However, the rising cost of living - especially housing and utilities, is making long-term settlement challenging for some,” Bendall concurred. 

Gareth Gibson, a South African real estate entrepreneur, recently took to the social media platform TikTok, to share his reasons for being relieved to exit the Mother City.

In his video titled ‘Unpopular Opinion: Leaving Cape Town for Johannesburg’, Gibson stated, “I’m actually leaving Cape Town and heading back home to Joburg.

"Don’t get me wrong, living in Cape Town for the past year has been absolutely amazing in many respects, but for the most part, I’m relieved to have received this transfer to go back to Johannesburg.”

He continued, “The rental alone buries many people, and in fact, even though I’m going back home to Johannesburg, I'm quite excited about it because all my friends and family are there.

"I’m looking forward to a little bit of breathing room. Since living here in Cape Town and trying to adjust to the cost of living, I have not been able to enjoy Cape Town to its full extent.”

Gibson also mentioned that budgeting for petrol and the cost of living in the city has been a “humbling experience". 

Many South Africans living in the Mother City echoed Gibson's sentiments. Commenting on the video, user @stefaniemcclean said, “I moved to Cape Town last year. People here don't like us 'outsiders' that much, all because of GP plates. It’s been lonely and expensive, but I’m trying to push through.”

Another user, @lazo.ntush, shared, “I’m from Cape Town, and in 2018, I made a conscious decision to move to Joburg due to the cost of living and mini racism. I’ve been here since, and that was the best decision ever.” 

Bendall said the influx of semigrants has driven up demand, particularly in areas like the Atlantic Seaboard and Southern Suburbs, pushing property prices higher.

“Many opt to rent before buying, intensifying rental market pressures and boosting investor yields. However, limited land and slow development approvals are keeping affordability low,” Bendall said. 

On the other hand, Mkhwanazi said for Johannesburg and Durban, the initial outflow resulted in a temporary dip in property demand, and therefore subdued property values.

“The potential return of residents could stabilise or even increase demand in these regions. In fact, there are early indications that this is already happening. If coupled with stable local governments and sustainably improved sentiment, the return of residents could also signify a reinvigoration of the property markets in these regions.” 

Bendall said while semigration initially dampened demand in Joburg and Durban some returnees are stabilising these markets, creating buying opportunities. “With fewer high-end buyers, well-priced properties in these cities may attract investors seeking long-term value.” 

Overall, Mkhwanazi said this trend highlights the sensitivity of the property market to economic realities and regional disparities.

“It underscores the importance of affordability and sustainable urban development and demonstrates that while people are willing to move for lifestyle, ultimately financial constraints will still dictate where people will reside. From a broader policy perspective, this highlights that there is a socio-economic need for more affordable housing within the major metropolitan areas of South Africa,” Mkhwanazi said. 

Betterbond said Cape Town’s continued appeal however sustains high-end property demand, but affordability concerns are shifting buyers to emerging areas like Paarl and Somerset West.

“Meanwhile, Joburg and Durban could see renewed activity, particularly in secure estates. The rising cost of living may also curb speculative buying in Cape Town, driving investment interest in more affordable metros. As the semigration cycle evolves, affordability is reshaping settlement patterns. While Cape Town remains desirable, its market must adapt to ensure sustainable growth,” Bendall said. 

Demand for property is certainly shifting to the outlying areas of the city, where prices are more affordable. In fact, price growth is stronger in regions such as the Winelands and parts of the Garden Route (particularly George) compared to Cape Town, Mkhwanazi added. 

Cobus Odendaal, chief executive officer of Lew Geffen Sotheby’s International Realty in Johannesburg, said that while the Cape has been the preferred destination for those seeking a lifestyle change and perceived better governance, Johannesburg property professionals have noted a recent shift in sentiment, largely driven by factors like Cape Town’s soaring property prices and high cost of living. 

"Granted, the Western Cape has much to offer, especially in terms of lifestyle and scenic beauty, but many who made the move are finding it challenging to sustain the higher costs associated with living in the Western Cape, especially amid ongoing economic pressures such as inflation and high interest rates.”

Odendaal also pointed out that, “Cape Town’s infrastructure struggles, including water shortages and traffic congestion, have diminished the city’s appeal for many, as those are some of the key reasons that they left Johannesburg in the first place.”

Meanwhile, Dean Lederle, co-founder at Launchbase, a prop-tech company based in Cape Town said: “The rise of digital nomads is not just reshaping how we work, it’s creating a powerful economic opportunity for South Africa, particularly in the property sector." 

The successful conclusion of the inaugural Nomad Week, hosted by the City of Cape Town, underscored the city’s strategic move to position itself as a global hub for remote workers.

While concerns have been raised about the impact of this trend on local affordability, data-driven insights reveal a compelling case for the economic benefits digital nomads bring to Cape Town’s property market, tourism sector and job creation.

Independent Media Property