Western Cape coastal towns, especially those along the Garden Route, are facing a severe shortage of affordable housing due to semigration-driven demand pushing up prices, according to estate agents.
Lightstone data indicates that the Western Cape remains South Africa’s leading destination for semigration, with 6,406 households from other provinces purchasing property there in 2023.
There has been a consistent increase over the years from 31% in 2020 to 46% by 2023, a report from Rain Marketing showed.
Gauteng had the second-highest influx of new residents, with 1,971 households, nearly three times fewer than the Western Cape.
Among Western Cape towns, Mossel Bay in the Garden Route region saw the highest influx of residents last year, causing property prices to exceed pre-pandemic levels.
Despite the market stabilizing after the 2021/22 post-pandemic surge, semigration continues to significantly influence the area, says Peter Máre of Lew Geffen Sotheby’s in Mossel Bay.
A family-sized three-bedroom home that could be bought for around R1.8 million in 2021 has now generally risen to between R2.5 million and R3.8 million, with some fixer-uppers still available for under R2 million.
Additionally, there is now a broader range of properties in the R5 million to R10 million price range.
“Although the market peaked in 2022 with a record high of 1,160 property registrations, demand has remained strong and property values have continued to grow,” Máre said.
The Garden Route town has become popular with upcountry buyers due to its proximity to George airport and the lifestyle it offers, he added. It is also recognized as having one of the best-run and most financially stable municipalities in the country.
Although Mossel Bay has become less affordable in recent years, its property is still more accessible than some other Garden Route towns.
According to Steve Neufeld, manager principal of Lew Geffen Sotheby’s in Plettenberg Bay, property values in Plettenberg Bay rose by around 24% in 2023.
The average property value in Plettenberg Bay has increased from R2.4 million to R4.1 million in just four years, making it challenging to find free-standing houses for under R3.5 million.
Sectional title units start at around R1.5 million, but flats and vacant land are scarce.
“There are a few residential developments in the pipeline; however, the town’s projected growth is beyond the projected increase in supply, and there is already a dire shortage of affordable housing,” Neufeld said.
More upscale properties are also entering the market, with two listings currently advertised at over R50 million.
In Knysna, property prices have also reached new records, rising from an average of R2 million in 2021 to R3.51 million this year. This growth is not limited to the Garden Route; small coastal towns closer to Cape Town are also seeing record prices.
Hermanus, another hot semigration destination, saw its median house price reach R2.51 million in 2022.
“We first started to see renewed activity at the beginning of 2021 when people were starting to adjust to the new normal and plan ahead, and there has been a steady and notable upswing since then,” says Brett Sparg, MD for Lew Geffen Sotheby’s in Hermanus.
However, the town’s geographical and environmental constraints limit the potential for new development and further physical expansion, Sparg added.
Comments