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Why property is so expensive in Cape Town

13 October 2021 2:40 PM
Tags:
Housing
Property
Cape Town high property prices
property prices

Refilwe Moloto speaks to CoCT Human Settlements Cllr Malusi Booi and FNB consumer and property economist Siphamandla Mkwanazi.
  • Gauteng, Western Cape, and North West Province are the three provinces experiencing inward migration
  • The main cities attract people due to job opportunities
  • The supply and demand of new housing developments do not balance out says FNB property economist
  • Mayco member for human settlements Malusi Booi says CoCT is focusing on more developments in the northern suburbs as businesses begin to move operations outside the city centre

Cape Town in South Africa is one of the most beautiful cities in the world. © handmadepictures/123rf.com

The focus of this discussion is housing and housing pricing models across South Africa.

In the Western Cape, the housing waiting list or backlog is sitting in an excess of 300, 000 people who are waiting for affordable housing.

But prices of residential homes in Cape Town are high.

Why does a 3-bedroom home in a decent residential area in Cape Town cost so much more than it would in Durban KZN or Tshwane Gauteng?

Refilwe Moloto speaks to Cllr Malusi Booi, CoCT mayco member for Human Settlements, and Siphamandla Mkwanazi, consumer and property economist at FNB on the housing and pricing dynamics here in Cape Town.

The housing shortage in Cape Town is often viewed as a result of people moving to the city from other parts of the country. Is there a similar situation in other areas of South Africa, asks Refilwe?

We are seeing similar trends in the rest of the country to different degrees. For instance, before the pandemic, we were seeing movement from different provinces.

Siphamandla Mkwanazi, Consumer and property economist - FNB

There are three provinces that are experiencing inward migration - Western Cape, Gauteng, and North West Province.

Those provinces usually provide job opportunities, so you find a lot of it in Johannesburg, a lot of it in Cape Town as well as North West because of those mining opportunities.

Siphamandla Mkwanazi, Consumer and property economist - FNB

The trend for a long time has been for people to try and move closer to the city centres for jobs and to avoid high transport costs and congestion, he notes, although the trend that has begun during the pandemic is seeing a slight diversion away from the centre to smaller towns such as George.

In many areas of South Africa and Cape Town, in particular, the supply and demand for new housing developments do not match, he notes.

In Cape Town, you find a lot of people in the lower end of the market are struggling to find new developments and so demand is greater than the supply of new property. You do find it elsewhere but it is more prevalent in Cape Town.

Siphamandla Mkwanazi, Consumer and property economist - FNB

He says areas in Johannesburg and Durban have targeted more developments for the middle segment.

Cllr Malusi Booi says the City of Cape Town is addressing this need by focusing on developments in the northern suburbs.

People are now starting to consider now having their businesses outside the city centre primarily because of congestion and other issues, also influenced by the pandemic.

Malusi Booi, Mayoral Committee Member for Human Settlements - City of Cape Town

he says the City of Cape Town is acting as an enabler making sure these micro developers have opportunities.

In areas like Bellville and Kraaifontein, there are micro developers coming up trying to increase the delivery of housing opportunities in those areas including Khayelitsha, Mitchells Plain, and more.

Malusi Booi, Mayoral Committee Member for Human Settlements - City of Cape Town



13 October 2021 2:40 PM
Tags:
Housing
Property
Cape Town high property prices
property prices

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