Semigration within South Africa is at its highest level in at least 16 years, with poor municipal service delivery among the reasons people are moving to other areas.
The Western Cape remains the most sought-after province in which to relocate to, and the fact that the City of Cape Town is regarded as the top-performing municipality in the country is no coincidence.
Other municipalities in the province are also performing well.
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FNB senior economist Siphamandla Mkhwanazi says property developers and buyers often consider the quality and availability of services such as water supply, waste management, street lighting, public transportation, and security/emergency services when evaluating potential locations. And in this regard, sentiment or perceptions become just as important as actual service delivery.
“This is due to the fact that buying/investment decisions are forward-looking, and often based on recent experience as well as the individual’s outlook.”
Furthermore, well-maintained and efficient municipal infrastructure can increase property values and attract potential buyers, while poorly maintained infrastructure can have the opposite effect.
“Buyers and investors may also consider the property taxes associated with municipal services when evaluating their overall cost of homeownership and deciding on the quality of properties to construct in that location.
“Once again, service delivery and the potential service delivery civil actions factor in, as buyers and investors care about the security and protection of infrastructure – for example, damage to property during protest action.”
In turn, he says, this feeds into the overall cost of living in an area as homeowners not only have to invest in private security, but, in some instance, may have to pay higher insurance costs for their properties.
Although Mkhwanazi cannot state for certain that people are moving specifically due to service delivery or lack thereof, he notes that large volumes of people are relocating within South Africa, mostly from the inland to the coast.
“Transaction volumes that are related to semigration are currently sitting at 14% of total (domestic relocations), the highest since we started tracking these in Q4 2007, and are significantly above emigration-related volume sales which are at 8% at the moment.”
FNB data suggests stronger movement from inland areas towards the Western Cape regions and some towns in the Eastern Cape. Currently, he says property values are outperforming in regions such as the Garden Route, Overberg District, and the West Coast, while prominent cities such as the City of Joburg and Ekurhuleni “are among the worst performers” out of the 15 biggest districts (by property volumes) in the country.
“Once again, we cannot say for sure that these trends are specifically due to service delivery, but suspect that perceptions would have somewhat played a role.”
Citing Ratings Afrika’s Municipal Financial Sustainability Index – which publishes the annual financial results of South Africa’s 100 largest municipalities, plus eight metros, Andrew Golding, chief executive of the Pam Golding Property group says the Western Cape is the highest-scoring province.
He explains that poor municipal service delivery in an area undermines economic activity and negatively impacts quality of life, which makes such an area unappealing to home buyers and investors.
“Those with the financial means can become more self-sufficient by, for example, installing solar panels for energy and water tanks. Alternatively, they may relocate to another area where service delivery ensures a better quality of life and a more vibrant business environment.”
While the pandemic , and opportunity to work from home, sparked a wave of semigration due to people being able to relocate to other areas where they could enjoy a better quality of life...the deterioration in municipal services “has reinforced this trend”.
“It prompts people to relocate to areas where they are not required to be self-sufficient but can rely on local government to deliver power, refuse removal, and water.
“Based on the Ratings Afrika rankings of municipalities, there is an obvious reason to relocate to the Western Cape as the municipalities are more financially robust and, therefore, more likely to be able to continue to deliver services.”
Golding says the fact that the Western Cape overall is financially sustainable is partly behind the reason that semigration is benefiting the entire province and not just the City of Cape Town. He explains that there are two ways to measure the impact of semigration on various provincial markets: shifts in building plans passed and trends in demand for investment properties.
Evaluating StatsSA data, he says the value of building plans passed in the Western Cape has risen above the value in Gauteng since Covid – once in August 2020 and consistently since February 2022.
“The value of plans passed in the Western Cape has fully recovered to pre-pandemic levels – as has the Eastern Cape (now above pre-pandemic levels). In KwaZulu-Natal, the value returned to pre-pandemic highs before slowing again, possibly due to the floods.”
Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty, says that, not too long ago, service delivery wasn’t something that home buyers had to take into consideration when deciding where to buy property. In recent years though, it has unfortunately become an increasingly important factor. The buying public is also becoming savvier about where not to buy because service delivery – or lack thereof – is increasingly highlighted in the media.
“In fact, a recent report by the Auditor-General revealed that only 41 out of SA's 257 municipalities received clean audits. It also found that many municipalities are not prioritising spending on critical infrastructure maintenance, resulting in service delivery failures.”
Considering that 22 of the 41 municipalities with clean audits are in the Western Cape, it comes as no surprise then that it’s currently the province attracting the lion’s share of semigrants, she says. In fact, the trend is becoming “very obvious”.
“Cape Town not only has a better service delivery record, it also has less load shedding than the rest of the country so we are seeing an influx of upcountry buyers to the city.”
This is also the case for towns along the Garden Route, including Plettenberg Bay and Mossel Bay – which ranked as South Africa’s most financially sustainable municipality out of 113, according to Ratings Afrika.
“In KZN, the KwaDukuza municipality’s good governance record is drawing buyers from Gauteng, especially in Ballito. In Gauteng, Midvaal, has achieved a good rating and this has not gone unnoticed.
“Conversely, many markets in the Northern Cape, Eastern Cape and Free State are under pressure as tales of bad governance continue to be broadcast in the media,” Geffen says.
From a primary residence point of view, David Jacobs, Gauteng regional sales manager for the Rawson Property Group, says municipalities in the Gauteng area and surrounds have not performed as well as those in the Western Cape. From massive potholes to frequent load shedding, these basic services are among those that households and businesses “cannot compromise on”.
“We are seeing a lot of families moving to provinces that provide better municipal services, such as the Western Cape. A lot of big corporates have also moved their head offices to the province.”
In addition, many areas in the Southern Cape, particularly George and Mossel Bay, are showing “immense” increases of retires moving there as the municipalities are better managed.
“From a KZN point of view, the flooding and riots have made people more tentative in their property decision-making, and those that are able to are moving to other provinces like the Western Cape, or towards the outlying coastal areas in KZN in search of better municipal services and general safety.”
Having said this however, Jacobs states that buyers entering the property market are “still quite loyal” to the area of residence, the family, and community.
“As much as people protest against lack of service delivery, it is not that easy to pack up and go elsewhere for most people as the areas that they would want to go to are typically higher-end, and not everyone can afford to stay there.”
He adds: “Based on my personal experience living in Gauteng and often travelling to the Western Cape, I think that the municipal services in the Western Cape far exceed Gauteng. Generally, those municipalities that do not have the financial means to upkeep the areas are the ones pushing people away.”
Echoing this, Samuel Seeff, chairman of the Seeff Property Group, says local service delivery has become a huge deciding factor for property buyers and investors, and this is been clearly seen in semigration patterns towards areas with good service delivery and security. The Western Cape and some inland areas are examples of those attracting semigrants.
In addition, he says property prices in areas with poor service delivery tend to be lower.
“Semigration was initially primarily to Cape Town itself, but has also spread to the surrounding , coastal areas, including Blouberg to as far as Hermanus, and especially to Winelands towns such as Paarl, Stellenbosch, Somerset West, Strand, and Gordon’s Bay – all of which offer excellent proximity to the Cape Town metro and fabulous facilities including some of the most desirable schools.
“We have also recently seen that more people are moving from KZN, the Durban area in particular, to Cape Town, although the KZN North Coast – Ballito and Zimbali areas – have been popular with semigration buyers from Johannesburg over the past 10-years. This is largely because the King Shaka International Airport is close and many business executives are able to settle their families in the Ballito/Zimbali area and then commute for business.”
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