Cape Town is facing a housing affordability crisis despite the appeal of its lifestyle. Data confirms many residents' concerns that the city is losing its argument regarding housing accessibility.
Price Increases and Yields
The average property price in the Western Cape in the first quarter of 2026 was R3,357,917, which is 72% higher than the national average of R1,951,230, according to Cape Town real estate strategist Nathan Scott. He notes that Gauteng now accounts for 50.8% of all national property transactions.
Scott emphasizes that buyers are making rational decisions because Cape Town is losing the affordability debate. The average net salary of a South African in May 2026 was R20,262 in real terms, the lowest level in two years. A nominal wage increase of 1.7% is not keeping pace with inflation, leading to a reduction in household purchasing power.
Income Requirements and Financial Pressure
To obtain a mortgage for a R2.5 million property—a standard three-bedroom family home in Bellville, Durbanville, or the Winelands corridor—a household must have a net monthly income of approximately R55,000 to R60,000. The real estate specialist also points out that the South African Reserve Bank's (SARB) repo rate hike by 25 basis points in May 2026, raising the base rate to 10.5%, has intensified this pressure.
Furthermore, the rental market offers no relief. 26,877 active Airbnb listings in Cape Town have structurally reduced the supply of long-term rentals, and landlords are setting corresponding prices. Moreover, stricter credit bureau checks limit housing options for tenants with payment history issues.
Structural City Issues
In Scott's view, the problem is structural. Land acquisition and urban landscape expansion are occurring through mixed-use development. Consequently, suburbs within a 40km radius of the city center, built around good schools, developed infrastructure, and decades of social investment, are becoming inaccessible to the very residents who created them.
Scott argues that while Cape Town surpasses most South African megacities in terms of services and infrastructure, this success has made the city desirable to capital, thereby making it increasingly unaffordable for the middle class upon which the city depends. He concludes that a city that displaces its teachers, nurses, workers, and pensioners is not a winning city but has a structural problem that the market alone will not solve.
Contribution of International and Domestic Buyers
Finella Bothes, an elite property consultant at Seeff Atlantic Seaboard, acknowledges that international buyers have contributed to strengthening Cape Town's luxury property market, particularly along the Atlantic coast. However, she insists that affordability is a much broader issue than just foreign buyers. She lists factors contributing to the current market condition: land scarcity, years of insufficient supply, semi-migration, rising construction costs, high demand, and Cape Town's global appeal.
Van Deventer Dowlath & Marx Inc reported that internal migration data from Wise Move shows that Gauteng and the Western Cape account for 89% of all tracked internal and external movements. Dr. Roelof Botta notes that this aligns with housing price data from Stats SA and BetterBond. The Western Cape showed a 7.7% real growth in housing prices in 2025, while Gauteng received 39% of all housing loans through BetterBond in the 12 months leading up to April 2026.
The firm also warns that rising property values increase financial risks related to defect disclosure, capital gains tax, and title deed accuracy. The high volume of transactions places additional pressure on Deeds Office processing times, and active markets are also becoming more prone to litigation, including landlord-tenant disputes.
