Cape Town’s exorbitant property prices a ticking time bomb, fuelling deeper inequalities

High property prices in Cape Town is making difficult for people to have access to affordable housing. Photo: Supplied

High property prices in Cape Town is making difficult for people to have access to affordable housing. Photo: Supplied

Published May 26, 2024


Ever increasing property prices in Cape Town may be causing big broad smiles and joy for those selling, but increasingly, local South Africans are getting left behind and before not too long, they may not be able to afford housing in the mother city.

The current situation in Cape Town beggars the question: where does that leave people who cannot pay hefty prices just to secure a roof over their heads?

A quick comparison of free standing houses shows that in uMhlanga, Durban, a three-bedroom house on average costs R5 million, while in Sea Point, Cape Town, the average cost of a three-bedroom house is R2 million more at around R7.7 million, according to Property24.

This further demonstrates how the housing market is increasingly unfavourable and unaffordable to many locals.

According to Ross Levin, a licensee for Seeff Atlantic Seaboard and City Bowl, in Cape Town’s City Bowl/CBD apartment sales were over R1.2 billion last year.

He said 46% of those apartments sold for under R2 million while 30 apartments sold above R5 million and certain sales were more than R10 million.

Factors such as urbanisation, traffic congestion, and the need to live closer to work will likely remain key drivers of the demand for apartments, according to Seeff agents.

Unrelated to commentary by Seeff, another factor that possibly push up with the price of property in Cape Town, is the announcement by the City of Cape Town about remote working visas making the city an attractive destination for foreigners, armed with Euros, Dollars and Pounds, to settle and work from.

This announcement could lead to more foreigners moving into the city leading to demand in property which in turn could push up the prices of property even further.

While property prices rise in Cape Town, more and more people are finding it difficult to secure affordable housing for themselves.

Ndifuna Ukwazi, an activist group that advocates for an increase in access to affordable housing, believes that the affordable housing crisis is a critical issue that became particularly acute in recent decades due to rapid urbanisation and rising property prices.

“Affordable housing should be a priority for everyone in Cape Town because it is fundamental to achieving social justice and ensuring that all residents can live with dignity and security,” Dr Jonty Cogger, attorney at Ndifuna Ukwazi told IOL.

However, this is not the case as people are finding themselves stuck in council-run social housing because property prices are too high.

Bevel Lucas, a retiree had to move from the Woodstock property that he owned to occupational housing in a dormant hospital in Woodstock, Cape Town due to gentrification.

“Gentrification pushed up the municipal rates in the area that I was living forcing me to leave my property because I could not keep with the costs.”

According to Lucas, he would like to move to a place of his own but he is unable to afford it because he does not have access to a government pension grant.

Lucas said that government will not allow him access to a pension because the property that he owns but cannot cover the costs for is of a certain value which does not make him eligible for a state pension.

Bevel Lucas. Picture: Supplied

In his current living situation at the occupational housing, Lucas said that he is not the only person who is unable to secure affordable housing.

According to Lucas, there are a number of young people who are working as well as families that live in the occupational housing that cannot pay for affordable housing because the prices are so high.

Cogger said that key factors preventing access to affordable housing include income inequality, land scarcity, and the commodification of housing, which skews the property market towards the wealthy and foreign investors.

The consequences of this crisis are severe, leading to increased homelessness, social instability, and economic disparity, according to Cogger.

Kashiefa Achmat, an activist with the Housing Assembly said that people that are able to secure affordable housing for themselves by renting a property may be homeless down the line as the price of rent increases and they cannot keep up with the rent.

“Keeping up with rent of property is not possible for people that are earning a basic salary because they have to take care of other costs like food, transport and taking care of children,” Achmat said.

Achmat said that another issue is that there is not enough affordable housing options available to people that live in Cape Town.

According to Achmat, she has to hustle extremely hard in order for her to keep a roof over her and manage the cost of living.

To solve the issue of the lack of affordable housing, Lucas proposes a solution where apartment buildings have property that is aimed at wealthy and people who earn basic salaries.

Lucas said that apartment buildings or properties should have both affordable housing for people as well as homes that are aimed at the wealthy.

Cogger said that Ndifuna Ukwazi proposes three solutions to sort out the affordable housing crisis in Cape Town.

“Implementing inclusive housing policies, increasing state investment in social housing, and utilising public land for affordable housing developments to ensure equitable access for all Cape Town residents,” Cogger said.