Cape Town’s property boom exposes a widening housing divide

Cape Town’s growing reputation as an international property destination is bringing more wealth into the city, but the competition for homes is becoming increasingly difficult to ignore.

While affluent buyers are chasing limited luxury properties along the coastline and in established suburbs, many other residents are facing rising prices, rental costs and a shortage of affordable housing.

The contrast is becoming more pronounced as the city’s population grows and demand for well-located homes continues to outstrip available supply. With local government elections taking place on Wednesday, 4 November, housing affordability is also among the issues facing voters.

A Bloomberg report examining Cape Town’s property market highlights how international wealth, domestic migration and limited housing stock are shaping the city’s residential landscape.

It points to a market where high-value properties are attracting significant interest, while the wider shortage of affordable homes continues to affect residents across income groups.

Luxury homes attract international buyers

Picture: Manuel Zublena/Figarophoto/Contour via Getty Images

Cape Town has become an increasingly prominent destination for wealthy individuals, with its climate, scenery, lifestyle and international connections contributing to its appeal.

The demand is particularly visible at the upper end of the market. Lightstone data cited in the Bloomberg report shows that, during the first half of 2026, approximately 75% of properties worth more than R20 million bought by individual purchasers were registered to non-South Africans.

When purchases involving local and foreign companies and trusts are included, the proportion falls to 35%, as the distinction is important, as the figures relate to different categories of buyers and do not suggest that foreign purchasers account for most property transactions across the city.

The report also notes that Cape Town’s high-end property market has benefited from wealthy South Africans relocating from other parts of the country, alongside international buyers and people working remotely.

The city’s most sought-after areas include the Atlantic Seaboard, where neighbourhoods such as Clifton, Camps Bay, Fresnaye and Bantry Bay are geographically constrained by the coastline and surrounding mountains.

Some properties at the top end of the market are being advertised for tens of millions of rand. The report cites residences at The Cape Town EDITION, for example, with some units listed for as much as R160 million.

However, the pressure is not limited to headline-grabbing luxury sales.

Cape Town’s residential property values have increased substantially over the past decade. Bloomberg’s analysis of Statistics South Africa index data puts the average increase at approximately 190% since 2010, outpacing other major metropolitan areas in the country.

At the same time, the number of properties listed for sale across the city has fallen by more than 20% compared with October 2025, based on Property24 data cited in the report.

The limited supply is contributing to faster transactions, particularly in the higher-value market. Lightstone figures show that Cape Town homes valued above R6 million take an average of 49 days to sell, compared with a national average of 67 days. The average selling period is also almost half that recorded in Johannesburg.

Lance Cohen, who runs Lance Real Estate, described the pricing pressure from the perspective of the luxury market.

‘Some houses are now selling at prices that, for me, as the broker, are uncomfortably high,’ he said. ‘I’m telling people “you’re paying too much” but what’s expensive today might look cheap tomorrow.’

The shortage is also being influenced by homeowners who are reluctant to sell properties that may be difficult to replace, with capital gains tax on years of appreciation another consideration.

While international buyers and wealthy South Africans compete for high-value homes, Cape Town’s broader housing pressures are tied to population growth, employment opportunities and the limited availability of affordable accommodation.

The city’s population has grown by almost 80% since 2000, reaching close to five million, according to the Bloomberg report. As an employment centre, Cape Town continues to attract people from other parts of South Africa and beyond, adding to demand for housing.

The consequences are particularly visible in well-established neighbourhoods such as Bo-Kaap and Woodstock, where rising property values, tourism and short-term rentals have contributed to changes in the local housing landscape.

A recent report examining** affordable housing** ahead of the 2026 elections highlighted the pressure on residents seeking homes in well-located areas.

It noted that the City and Western Cape Government listed just under 6 700 existing affordable housing units across the metro, with none situated in the inner city.

The report also pointed to rising rental costs, with two-bedroom flats in the CBD advertised at an average of approximately R29 400 a month, while average Western Cape rents increased by 9.7% in the year to June 2026.

The shortage of residential properties is also affecting the rental market, particularly in areas where holiday accommodation and short-term letting are popular.

City faces pressure to balance growth and housing needs

Bloomberg reports that villas in affluent Cape Town suburbs can command around R300 000 a night during the peak December to February period, as well as when the city hosts major international events.

In the central business district, the growing availability of furnished short-term rental apartments has raised questions about the amount of housing remaining available to people seeking longer-term accommodation.

Data from Inside Airbnb cited in the report puts the number of Cape Town housing units listed on the platform at approximately 27 500. That is more than double the number recorded in cities including Barcelona, Amsterdam and New York.

The City of Cape Town has introduced measures aimed at addressing housing affordability and the use of residential properties for short-term accommodation.

These include plans to apply commercial property tariffs to homes primarily used for short-term rentals, bringing them closer to the rates paid by hotels and guesthouses.

The proposal is intended to address the impact of properties being used for visitor accommodation rather than long-term housing.

The City has also been releasing public land for affordable housing developments. In an update published in October, the municipality said 14 sites had been released for housing purposes, with the potential to deliver approximately 7 000 residential units, including 4 000 affordable housing units and 2 500 social housing units.

However, the scale of the challenge remains significant, with housing demand extending beyond the luxury market and into communities where access to employment, transport and basic services is an important part of the affordability equation.

Independent economist John Loos described the relationship between employment and housing demand in the Bloomberg report, saying: ‘Employment influences housing demand, and Cape Town has become a “victim” of its relative economic success.’

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