Grant Smee
Only Realty Property Group
CEO
In the first five months of 2025 alone, international homebuyers spent over R1 billion in Cape Town. This includes record-breaking property sales of R66 million in Clifton and R52 million in Bishopscourt.
These statistics from ooba Home Loans reaffirm the Mother City’s dominance as both South Africa’s most active housing market and a global luxury destination. The concern, says Grant Smee, CEO of Only Realty Property Group, is the potential for excluding local buyers from the market.
“Cape Town’s growth reflects a blend of lifestyle appeal and foreign investment confidence,” says Smee. “While this has resulted in higher price tags for many of the city’s properties, opportunity still exists to find well-priced homes in the region’s more affordable suburbs.”
Massive spike in property prices
With 41,100 millionaires calling South Africa home, the Africa Wealth Report 2025 by Henley & Partners and New World Wealth identifies Mzansi as Africa’s wealthiest nation – with Cape Town ranked among its richest cities. It also states that all five of the country’s most expensive suburbs, where property prices exceed R20 million, are Camps Bay, Clifton, Constantia, Bantry Bay, and the Waterfront.
Since 2010, property prices in Cape Town have risen by 160%, according to Statistics SA, with the Western Cape—home to just 12% of the population—accounting for 31% of the country’s total property value and 40% of transactions above R10 million (Lightstone).
What’s driving property prices in Cape Town?
Smee states that several key factors underpin Cape Town’s impressive property market performance.
Foreign investor demand
Between 2019 and 2024, Lightstone indicates that the proportion of non-resident foreign buyers increased from 2.9% to 3.7%, with average purchase prices exceeding R2.7 million—more than double that of local buyers.
“Favourable exchange rates, global economic uncertainty and relative affordability compared to other coastal markets have driven demand for luxury homes across the Atlantic Seaboard and Southern Peninsula,” says Smee.
Job creation and good governance
Cape Town’s well-run local administration continues to outperform other metros, with the Western Cape scoring the highest among provinces according to the latest Ratings Afrika Municipal Financial Sustainability Index. Smee notes: “Stable infrastructure, service delivery and a thriving private sector have encouraged domestic and international migration to Cape Town.”
Scenic lifestyle and limited land
Nestled between Table Mountain and the Atlantic Ocean, Smee says that Cape Town’s geography is both an attraction and a constraint: “Limited space for expansion keeps supply tight and prices elevated, particularly in high-demand suburbs like Clifton, Constantia and Bantry Bay.”
Measures to increase access for local buyers
However, he says that, as property prices rise, policymakers and the private sector are responding to growing affordability concerns in several ways:
Taxing foreign buyers
A proposal to introduce a surcharge or tariff on foreign property purchases has gained traction among urban planners, as foreigners currently pay identical property tax rates as South African citizens. “While a proposed tax might open the market to local buyers, this would have to be carefully implemented so as not to deter investment in the country,” he advises.
Airbnb regulations
Cape Town Mayor Geordin Hill-Lewis recently announced plans to reclassify short-term rentals operating as businesses under commercial property rates. “Short-term letting has become a great investment strategy in itself,” notes Smee. “While it drives tourism and job creation, it’s also reduced stock for long-term residents while pushing up rental prices. A more structured approach could benefit the marketplace.”
Innovative financing models
He says that banks are also introducing creative solutions to help first-time buyers enter the market: “FNB allows group buying with up to 12 co-signatories, while Standard Bank reports that the average loan approval for buyers under 35 sits at R1.2 million, although this is still well below the cost of an average City Bowl studio apartment,” says Smee.
Where can buyers still find value?
While Cape Town’s Atlantic Seaboard may be out of reach for many, Smee says that several suburbs still offer relative affordability and solid long-term potential: “These neighbourhoods combine lifestyle appeal with more accessible price points, drawing steady demand from first-time buyers and young families.”
Some of the more affordable Western Cape suburbs include:
Muizenberg: Beachfront location with proximity to the Southern Suburbs (average price: R1.8 million).
Paarl: In the Cape Winelands with access to the N1 and reputable schools (average price R2.3 million).
Observatory: Proximity to the city centre, university, and healthcare (average price R2.1 million).
Claremont: Good retail and transport links with modern apartments (average price R2.8 million)
Wynberg: Historic area with village charm, greenery and good schools (average price R1.7 million).
Woodstock: Trendy and vibrant area for creatives and entrepreneurs (ave. price R1.5 million)
Why Cape Town remains a substantial investment
Despite rising prices, Smee says Cape Town remains one of South Africa’s most reliable property markets. According to Lightstone, the Western Cape experienced the fastest property value growth in 2024, with transaction volumes increasing by 18% year-over-year.
Even affordable suburbs achieved annual gains of 6% to 9%, well above inflation. “Cape Town continues to show exceptional resilience,” Smee notes, “offering investors lifestyle appeal, steady capital growth and policy stability.”