Lew Geffen Sotheby’s International Realty

Cape Town’s real estate bus rolls on, leaving first-time buyers on the curb

Cape Town has seen property prices surge by 160% since 2010, making it increasingly difficult for young buyers to secure homes near central employment hubs, reports Bloomberg.

A lack of inherited wealth, combined with the need to support extended families, is pushing many out of reach of desirable neighbourhoods and while banks and the city government are introducing homeownership initiatives, experts agree the main issue remains: too little housing in prime locations.

“Born Frees of all races are finding it harder to buy property because the closer you get to economic activity, the more expensive it is—even studio apartments are going for 1 million rand and more in Cape Town,” said Mfundo Mabaso, head of home and structured lending at FNB.

Banks are stepping in with solutions like 100% home loans and co-signatory mortgages for groups of up to 12 people. Standard Bank reports that home loans for under-35s average around R1.2 million, enough to buy only a small studio in the City Bowl.

The structural problem is a shrinking supply. With Table Mountain and the Atlantic Ocean enclosing much of Cape Town’s high-demand urban land, opportunities for new developments are few and far between.

To address this, the City of Cape Town has released various parcels of inner-city land for affordable housing projects and established a Development Charges Fund to subsidize infrastructure costs. The city is also fast-tracking building approvals and promoting alternative construction methods.

“This model has big potential to help solve Cape Town’s housing shortage,” Eddie Andrews, head of spatial planning and environment affairs in the mayor’s office told Bloomberg. He noted that “the fundamental reason why well-located housing is unaffordable … is because there is not enough housing supply on the market.”

Developers like Balwin Properties have expanded their focus on the Cape Town property market by developing a range of affordable apartments, targeting the growing middle-income market. These apartments offer a combination of affordability, high-quality standards, and lifestyle amenities.

Cape Town’s residential property market however, continues to lead the country, with home price growth of 8.7%, significantly above the national average of 5.2%, according to the latest data from Lightstone.

The Mother City remains far ahead of metropolitan rivals like Johannesburg and Durban, where price increases have hovered closer to 2%.

And this, even as South Africa faces economic challenges with the Western Cape showing remarkable resilience. While housing markets in many other regions remain flat or show modest gains, Cape Town’s continues to post strong returns.

For the seventh year in a row, Cape Town has outperformed all other regions in residential price growth. According to FNB’s Property Barometer, homes along the coast tend to appreciate faster, but Cape Town’s rate of 6.2% still stands out, well above the 1.8% and 1.9% seen in Johannesburg and Durban respectively.

The Western Cape accounted for 38% of national real estate transaction value last year despite having just 11% of the population, said Arnold Maritz, co-principal at Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs.

The Western Cape’s economy is a key driver of the region’s property boom. Stats SA reports the province’s average household income at R407,000, a substantial margin above Gauteng’s R300,000, and nearly 50% higher than the national mean.

Not only does the region boast lower unemployment than the national average, but its formal job sector grew 3.1% in 2024, compared to the national figure of 1.2%.

Unlike other regions that rely heavily on a few sectors, Cape Town’s economy is more diversified. Financial services make up a healthy portion of GDP, but the city has also cultivated a growing tech sector, which is expanding at a rate of 8% per year.

In 2024, more than R14.7 billion was invested into Cape Town’s green economy, according to a joint report by Wesgro and the City of Cape Town. This injection of capital not only boosts employment but helps attract skilled professionals from across the country.

Stats SA data shows a net migration of 92,000 working-age adults to the Western Cape in the past two years, the majority of whom hold tertiary qualifications and work in professional roles.

Cape Town’s well-managed infrastructure continues to play a central role in its property appeal. The city consistently ranks higher than other metros in service delivery.

These services translate into real economic benefits. According to the Bureau for Economic Research, Cape Town workers deliver 15% higher productivity per hour compared to counterparts in other cities, due in part to fewer infrastructure disruptions.

With a R12.6 billion infrastructure budget for 2024/25, the city is investing heavily in the future. This includes R2.3 billion for alternative energy and R4.1 billion for transport upgrades.

Cape Town’s luxury market is booming, often led by international buyers. “In our office, buyers with budgets exceeding R15 million have become the norm rather than the exception,” said Maritz.

“We repeatedly see clients inquiring about specific properties, only to learn they were sold within days – sometimes hours – of listing. The speed at which quality stock moves in these neighbourhoods is remarkable.”

Buyers are drawn not only by potential capital appreciation of 8–10% annually and rental yields of up to 5.5%, but also by the lifestyle, proximity to top schools, and the overall quality of life.

Investor confidence follows performance – and it’s in Cape Town

As South Africa’s economy continues to struggle under slow growth and structural challenges, Cape Town’s property market stands apart – delivering consistent returns that outpace national averages and defying concerns of a post-pandemic slowdown.

According to Lightstone, national house prices rose 5.2% in the year to January 2025, while properties in the Western Cape surged by 8.7%. Cape Town has now outperformed the national property market for seven consecutive years.

Even among South Africa’s coastal cities, where average growth is 5%, Cape Town leads with 6.2% – more than triple Johannesburg’s 1.8% and well ahead of Durban’s 1.9%.

Arnold Maritz, co-principal of Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs, had observed this concentration of investment first-hand.

“According to Stats SA, the Western Cape accounted for 38% of national real estate transaction value last year despite having just 11% of the population,” he said. “This concentration of capital spoke volumes about where investors were placing their confidence.”

Cape Town’s strong property performance is backed by robust economic fundamentals. According to Stats SA, the Western Cape now boasts an average household income of R407,000 – 36% higher than Gauteng’s R300,000 and nearly 50% above the national average.

Formal sector jobs in the province grew 3.1% in 2024, compared to just 1.2% nationally, while unemployment sat at 23.4% – well below the national average.

Unlike Johannesburg’s economy, which remains heavily dependent on finance and manufacturing, Cape Town offers a more balanced mix: financial services contribute 22% to provincial GDP, while the city’s tech sector is growing at 8% annually, and green economy investments reached R14.7 billion in 2024, according to Wesgro.

This growth attracted skilled migrants. Stats SA data showed the Western Cape gained 92,000 working-age adults over two years—68% of whom held tertiary qualifications, with 42% in professional or managerial roles.

Service	Cape Town	National Average
Water Supply Reliability	98%	76%
Electricity Availability	94%	68%
Waste Collection	99%	82%
Road Maintenance	91%	63%

Service delivery remains one of Cape Town’s strongest selling points. Compared to national benchmarks, the city continues to outperform:

These efficiencies translate into real economic savings. Businesses in Johannesburg reportedly spent 18% more on backup power, and transport costs were 22% higher due to infrastructure challenges.

Cape Town workers, meanwhile, were found to be 15% more productive per hour (Bureau for Economic Research).

The City of Cape Town committed R12.6 billion to infrastructure for the 2024/25 financial year, with R2.3 billion earmarked for alternative energy and R4.1 billion for transport upgrades.

The resilience of Cape Town’s property sector is perhaps most evident in its luxury segment. Three recent sales on Constantia’s Rhodes Drive – each over R40 million – reflected investor expectations of 8–10% annual capital growth, rental yields of 4.5–5.5%, and the benefits of rand-denominated hard assets.

Maritz noted how luxury buyers are becoming increasingly common: “In our office, buyers with budgets exceeding R15 million had become the norm rather than the exception,” he said.

“We repeatedly saw clients inquiring about specific properties, only to learn they were sold within days – sometimes hours – of listing. The speed at which quality stock moved in these neighbourhoods was remarkable.”

Emerging markets like the Northern Suburbs showed 12% price growth in 2024, while mixed-use developments commanded an 18% yield premium over single-use properties, according to JLL South Africa.

While some analysts have questioned whether the market could maintain such momentum, the fundamentals remain strong. FNB projected annual price growth of 7–9%, with the prime segment reaching as high as 10–12%.

In high-demand areas such as Constantia, Claremont, and Bishopscourt, Lightstone data indicated gross yields of 5.5–6.2%.

Cape Town’s property market continues to attract capital, skills, and investor confidence – making it one of South Africa’s few economic outliers in a challenging national environment.

Big shift in Cape Town’s property market

More than half of all property sales in most Cape Town suburbs are now sectional title, a trend driven by the city’s sharply rising real estate prices.

Now Africa’s most expensive city for real estate, Cape Town’s housing market has surged in recent years. According to Lightstone data, it is also outperforming Johannesburg in both price and volume of sales. In 2024, Cape Town recorded R81 billion in property sales, up from R74 billion in 2021.

Meanwhile, Johannesburg’s figures declined from R59 billion to just over R47 billion in the same period.

Despite escalating prices, Lew Geffen Sotheby’s International Realty’s Brent Townes believes the sectional title segment still offers value.

These properties—typically apartments or townhouses in shared developments—allow individuals to own a defined section of a building along with a stake in the common property. They’re increasingly popular among first-time buyers, who now account for 40% of purchases in this segment.

Forty percent of sectional title purchasers are first-time buyers looking to get a foot on the ladder of Cape Town’s buoyant property market, said Townes.

First-time buyers now account for 72.71% of the market—up from 71.34% a year ago—indicating growing confidence among new entrants, according to MyProperty Home Loans’ latest data comparing March 2024 to March 2025.

Despite financial pressures from the March Budget, several positive shifts have improved conditions for buyers, including a reduced prime lending rate (from 11.75% to 11%), a higher transfer duty exemption threshold, and zero transfer duty on homes under R1.2 million.

The average first-time buyer purchase price rose slightly to R1,215,522, while the average approved bond amount jumped from R1,029,192 to R1,567,694.

Among the city’s most desirable areas for sectional title are the Southern Suburbs, where proximity to top schools, the University of Cape Town, commercial hubs and green spaces has pushed demand—and prices—higher.

However, for those looking for more accessible pricing or lock-up-and-go convenience, there’s a multitude of sectional title options, especially in Observatory, Salt River, Claremont, Wynberg and Wynberg Upper, Rondebosch and Plumstead, said Townes.

While average property prices in these suburbs sit around R2.25 million, sectional title units can range from R800,000 to R1.3 million.

Thanks to rampant development in recent years, which has seen the number of sectional title properties soar, coupled with rising freehold prices and lifestyle choices, more than 50% of the properties sold are now sectional title with options to suit all budgets and lifestyle needs, said Townes.

Townes also highlighted robust interest from investors—many purchasing for rental income or for their children attending university:

These buyers tend to either buy for their children attending university, for third-party tenants in the rental sector, and also for the purposes of having a diversified investment outside of their current metro where they reside.

He cautioned buyers to prepare for costs beyond the purchase price. While the purchase price is certainly the largest expense, additional costs can quickly add up, and they aren’t always factored in when buyers set their budgets.

For a R2.25 million apartment, additional upfront costs can exceed R200,000, including:

Bond registration: R52,603
Transfer fees: R97,634
Moving expenses: R10,000+
Utility deposits: R2,000+
Wi-Fi/fibre setup: R1,500–R5,000
Insurance: R500–R2,500/month
School fees/uniforms: R5,000+

Beyond the purchase price, buyers should budget for at least R200,000 to R250,000 in additional upfront costs, Townes explained.

Monthly levies are another key consideration, especially in complexes offering premium amenities.

The silent killer when it comes to selling your property

The property market in South Africa is finally beginning to move at a quicker pace, says the Seeff Property Group.

The price is usually the main draw card of a property and, if not priced correctly and offering value compared to the hundreds of properties available to buyers, it can delay the sale, said Tiaan Pretorius, manager for Seeff Centurion.

Determining the correct asking price when a property is listed on the market for sale is often one of the most difficult issues. Gerhard van der Linde, MD for Seeff Pretoria East pointed out that sellers tend to have a much higher expectation of the worth of their property compared to the market realities. The biggest risk for sellers is that serious buyers tend to overlook an overpriced property, resulting in lost opportunities.

The reason for the higher price expectation is often that the seller actually needs to make a particular profit. It is therefore vital for the seller to be upfront with the agent about their financial needs.

Van der Linde said that this is particularly crucial if the sale must be completed urgently. The agent can then advise the seller on what can realistically be achieved within a particular timeframe.

How is the asking price determined?

Pretorius said the main tool used by property agents to determine a suggested listing price is a Comparative Market Analysis (CMA). This analysis considers recent sales of similar properties in the area, as well as those listed on the market. It compares like for like in terms of property size, condition, and features, to establish a realistic price benchmark.

Various factors determine the asking price. These include the location and amenities in the area, size and condition of the property, demand for the particular property type and style, demand for the area, and current economic and market trends.

The property is also assessed in relation to other properties in the neighbourhood. For example, the property might have desirable extras such as a braai room and a swimming pool which could entice buyers to pay slightly more for the home.

Elaborate extras are, however, not a guarantee of a higher price. That is one of the main reasons why property agents caution against overcapitalising, said Pretorius.

Overpricing

Given that property listings are now all online, buyers have access to all properties on the market. Van der Linde says that buyers can therefore immediately assess the choice of properties available in their desired price band, and will likely only contact those which appear to offer value for money.

It follows that a property which stands out as overpriced will be overlooked. The result is that it will attract fewer buyers, if any, and could consequently stay on the market for longer.

Overpricing in relation to the market will simply drive potential buyers to competing properties. Buyers usually look in particular areas because it fits with their affordability. If the price is out of step with peer properties, it will simply drive buyers to competing properties on the market.

You may then end up having to reduce your asking price which might also be off-putting to buyers. Price drops can have a negative impact as it can create the impression that the seller is desperate which can lead to lower offers.

Van der Linde says decades of experience has shown that rather than attracting a higher price, an overpriced property may end up selling for lower than what it would have if priced correctly at the outset.

Getting the right property value is essential in real estate, as it attracts buyers and increases profits. Artificial Intelligence (AI) has transformed property valuation, making it more accurate and data-driven.

AI doesn’t just look at the sale prices of similar homes; it can also be used to analyse factors like local crime rates, available amenities, and current market trends, providing a deeper, more holistic understanding of a property’s value.

“Artificial intelligence is a game-changer in real estate investment, offering powerful tools for property analysis, market predictions, and even automated property management,” said Arnold Maritz, co-principal of Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay.

“AI-powered predictive analytics use historical and real-time data to forecast future market trends, which helps investors make data-driven decisions.

“For instance, AI algorithms can analyse data from a wide range of sources, including economic indicators, property sales history, local infrastructure projects, and even consumer sentiment, to predict property values and rental prices.

“And by identifying market trends earlier, investors can capitalise on opportunities whilst avoiding riskier investments like areas with declining value.”

One of the most time-consuming aspects of the service provided by property professionals is the due diligence required to be able to advise both sellers and buyers on ‘value’ for a specific property.

AI-driven valuation models simplify this process by analysing similar properties, taking into account factors like location, property size and condition, to deliver real-time estimates of value.

“International companies like Zillow and Redfin are already using this tool to provide ‘instant’ property valuations based on massive datasets, helping buyers make quick and accurate assessments as they browse online.”

Big data is reshaping property investment by offering insights into markets, demographics, and property performance and this data-driven approach helps investors make better decisions and personalise their investment strategies.

A bump in the road for Cape Town semigration narrative

For years, Johannesburg has been feeling the effects of a mass migration to the Western Cape, with many South Africans drawn by promises of stunning scenery and a more relaxed lifestyle.

However, a recent trend suggests a slight deviation in the narrative for semigrants.

Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg, has noted a growing number of inquiries from individuals considering a return to Johannesburg in search of a more affordable housing market.

In addition, many people in South Africa have been asked to return to the office full-time, prompting a shift in their commuter, flexible, and remote work lifestyles.

As a result, a growing number are choosing to return to Gauteng to be closer to their workplaces, adapting to the new demands of in-office work.

Discovery Bank’s SpendTrend24 report showed that over three-quarters of South African office workers now commute to the office at least three days a week.

Odendaal said that the Western Cape’s appeal initially stemmed from the desire for a change in lifestyle and perceived improvements in governance.

However, with property prices in the region soaring by 25% over the last five years, many are now feeling the weight of these increased costs.

In contrast, Johannesburg’s property prices have increased by a more modest 12%, prompting many former residents to reconsider their decision amidst rising economic pressures like inflation and interest rates.

“In recent months, we’ve started fielding a growing number of enquiries from people looking to move back to Johannesburg, with particular interest in properties at the higher end of the market,” Odendaal said.

“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.”

Commuters in the region also face up to 55 hours of delays annually while travelling to work in the city centre, further undermining the once-glamorous appeal of the Western Cape.

Additionally, ongoing infrastructure challenges—such as Cape Town’s water shortages and worsening traffic congestion—have made the city less attractive for many who previously left Johannesburg for its calmer environment.

The 2024 Annual Market Report by PayProp supports this shift, revealing that rental and property prices in the Western Cape now significantly outpace those in other provinces. Meanwhile, Johannesburg’s property market remains accessible, offering a wider variety of options for potential buyers.

Several factors are driving professionals back to Johannesburg, Odendaal said, with the return of more traditional office work being a key contributor. “Johannesburg is still South Africa’s economic powerhouse, contributing nearly 16% of the nation’s GDP and over 40% of business services output,” he said.

For many professionals, the competitive nature of their industries makes a return to Johannesburg a necessity, not just an option. As interest in Johannesburg’s relatively affordable yet high-value properties increases, demand is expected to rise, putting upward pressure on property prices.

The shift in Johannesburg’s real estate market signals a change in the urban migration landscape, as former semigrants reassess their choices and grapple with the realities of life in Cape Town.

The trend is not as recent as commentators suggest. Rory O’Hagan, principal of Chas Everitt Hyde Park and Sandton noted a year ago that wealthier buyers were looking to return to the Highveld.

“Frankly, many top executives and professionals are now weary of the costs and inconvenience of commuting weekly between work in Johannesburg and family in Cape Town, while others admit that they have not adapted well to the Cape’s unpredictable weather and would prefer the Highveld’s sunny winters,” he said.

This villa in Camps Bay is being rented out for R105,000 per month

Lew Geffen Sotheby’s International Realty says it has closed on 12-month rental deal for a contemporary four-bedroom villa in one of Cape Town’s most sought-after areas, Camps Bay.

Priced at R105,000 per month, this luxurious property is perfect for those looking for an extraordinary living experience with stunning panoramic views of the ocean and mountains, the group said.

The modern villa spans three levels, showcasing the epitome of style and comfort. The downstairs area features three spacious bedrooms, all with en-suite bathrooms. There’s also a separate laundry room and a cozy TV room/lounge with direct access to a private outdoor space.

The master bedroom, also en-suite, includes a walk-in closet and a generous balcony that offers ocean views.

On the upper level, residents will find an expansive living area that flows seamlessly from the open-plan kitchen, scullery, dining, and lounge areas. The lounge area includes a fireplace and opens onto a large terrace that features outdoor furniture and a sparkling pool, ideal for both relaxation and entertaining.

The modern kitchen is equipped with high-end appliances, including an integrated double fridge and freezer.

An additional bedroom, which can be converted into a study or office, offers access to a separate bathroom for guests’ convenience. The villa also boasts air conditioning in every bedroom and living area, a high-end security system, custom shutters, and a lift for added convenience.

For added convenience, the property includes a double garage with direct access to the villa, as well as two additional parking bays.

International buyers are flocking to South Africa’s best retirement spots

Real estate agents in the Western Cape and KwaZulu-Natal, particularly in high-demand areas like the Atlantic Seaboard and Umhlanga, are seeing an increase in viewing requests from international buyers.

These buyers are often referred by friends, family, or return visits, with many considering relocating to South Africa after the festive season.

An Austrian family recently purchased a R72-million holiday home in Silverhurst Estate, Constantia, Western Cape, after just one visit and a quick decision within 48 hours.

Meanwhile, a British retiree from the London Home Counties chose to invest in property in South Africa to enjoy year-round golf.

Rory Maritz, Co-Principal at Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay, said these sales highlight South Africa’s growing appeal to international buyers.

He pointed to a French couple from Paris, who are purchasing a home in Cape Town sight unseen, offering more than the asking price, as another example of this trend.

Maritz noted that some buyers are looking for investment properties, while the majority seek holiday homes or permanent retirement residences.

Keri Culver, Senior Immigration Consultant at Xpatweb, noted a rising interest in South Africa’s Retired Person’s Visa – one of the most accessible visas of its kind globally – particularly among Europeans, British, Americans, and Canadians.

Recent data from the Department of Home Affairs (DHA) reveals that over the past four years, more than 5,000 applications have been received from individuals in more than 100 countries looking to retire in South Africa.

The most significant numbers of applications come from the UK, China, Germany, and the USA, with notable interest also coming from Switzerland, the Netherlands, and Sweden.

Dr. Andrew Golding, CEO of Pam Golding Properties, shared that since 2023, they have seen a rise in interest and completed sales to international buyers from a variety of countries, including the UK, Germany, Zimbabwe, the USA, Switzerland, Austria, UAE, France, Belgium, Nigeria, and other African nations.

The most sought-after locations for foreign buyers include Cape Town, the Boland and Overberg regions (such as Franschhoek, Stellenbosch, and Hermanus), the Garden Route (including Plettenberg Bay, Knysna, and George), and areas north of Durban, like Ballito. Gauteng’s upscale neighborhoods, including Fourways, Rosebank, and Sandton, are also attracting attention.

According to Rory Maritz of Lew Geffen Sotheby’s International Realty, there is growing demand from high-net-worth and ultra-high-net-worth individuals, particularly from the UK and Europe, for properties in the R20-million-plus price range.

The agency is also fielding inquiries from buyers in the US, as well as from more distant regions like Bermuda and the Cayman Islands.

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