Running on Full: Western Cape influx and the housing market

It's an inarguable fact that the Western Cape, particularly Cape Town, has become a magnet for internal migration in South Africa, driven by perceptions of better governance, safety, and quality of life. This influx, often termed "semigration", has intensified pressure on the region's housing market, leading to an escalation in property prices. It has become a burgeoning housing crunch which requires agility in navigating both demand and capacity.

The price of land and economics

Naturally, this traffic has led to a significant population increase. In 2023 alone, over 6,000 households moved to the Cape, with many settling in suburbs like Constantia and Durbanville. This trend is fuelled by families seeking better services, security and schooling.

In tandem with this growth, a significant rise in property prices is ongoing. In the 12 months leading up to June 2024, property prices in the Western Cape increased between 7% to 8%, while prices in Gauteng decreased by over 1% over the same period. This disparity has made it challenging for many to afford homes in the Western Cape. Nevertheless, the migration is continuing and the region beginning to feel the problems of space and high prices.

The rental market is also feeling the pressure. The rise of short-term rentals, particularly through platforms like Airbnb, has exacerbated the housing shortage. In areas like the City Bowl and Atlantic Seaboard, Airbnb listings have increased considerably since 2022. The drawback is that this trend reduces the availability of long-term rental options for residents.

The inevitable downside of this popularity means that Cape Town now faces a severe housing shortage driven by rapid urbanisation and population growth. The city's housing backlog has long past earlier estimates, and even if R1 billion was spent annually on building houses, the demand for formal housing would only be met by 2033.

The government subsidy band has not moved upwards to reflect inflationary creep, which means that more families are moving into the gap market. This shift has led to an increase in informal settlements and homelessness, as many cannot afford housing in the formal market.

Addressing the challenge with bold initiatives

The Western Cape government has announced plans to develop 7,000 affordable housing units, amounting to several billion. In addition, projects like the Adam Tas Corridor are expected to yield between 2,753 and 3,835 inclusionary housing units over the next decade.

Additionally, the proposed Milkwood City Project aims to create a mixed-use development with around 200,000 houses, 400 educational institutions, and 370 public service facilities. However, plans don't always fall into action easily. These projects face certain challenges, including funding constraints, bureaucratic delays, and even community resistance.

A multifaceted approach

Because of ongoing difficulties, several supportive actions have been devised and are currently being implemented to address the Western Cape's housing crisis with an innovative, targeted response.

• Policy reform: This means adjusting the government subsidy band to reflect inflation and expanding support for the gap market.
• Regulation of short-term rentals: Implementing policies to create a reasonable balance between the benefits of tourism and the housing needs of residents.
• Public-Private partnerships: Encouraging sensible collaboration between the government and the private sector to fund and develop affordable housing projects.
• Community engagement: Involving local communities in planning processes to ensure developments meet their needs and gain their support.

By taking these steps, the Western Cape is hoping to work towards a more equitable and sustainable housing market that is able to accommodate its growing population, while still preserving the quality of life that attracts so many to the region.