Western Cape coastal towns, particularly along the Garden Route, are experiencing a dire shortage of affordable housing as semigration-driven demand continues to drive up prices, estate agents say.

According to Lightstone data, the Western Cape is still by far South Africa’s top semigration destination, with 6,406 households from other provinces having bought property in the province in 2023. Gauteng had the second highest influx of residents, albeit almost three times lower at 1,971.

Among the Western Cape towns, Mossel Bay in the Garden Route region experienced the highest influx of residents last year, causing property prices to rise well above pre-pandemic levels.

Although the market has stabilised since the 2021/22 post-pandemic rush, semigration is still a significant driver in the area, says Peter Máre of Lew Geffen Sotheby’s in Mossel Bay.

A family-sized three bedroom home could be bought for around R1.8 million in 2021, and although there are still a few fixer-uppers available for under R2m, today freehold homes of that size are generally priced between R2.5m and R3.8m. Furthermore there is now a wider array of properties in the R5m to R10m price band.

“Although the market peaked in 2022 with a record high of 1,160 property registrations, demand has remained strong and property values have continued to grow,” Máre said.

Homes like this four-bedroom unit in Pienaarstrand, Mossel Bay, are highly sought-after. Picture: Supplied.

The Garden Route town has become popular with upcountry buyers because of its proximity to the George airport and the lifestyle on offer, he added. It is also considered to have one of the best-run and most financially stable municipalities in the country.

Although it has become less affordable in recent years, Mossel Bay property is still more accessible than some of the other Garden Route towns.

Plettenberg Bay saw its values rise by around 24% in 2023, according to Steve Neufeld, Manager Principal of Lew Geffen Sotheby’s in that town.

The average property value in Plett has risen from R2.4m to R4.1m in just four years, and it has become difficult to find free standing houses for under R3.5m. Sectional title units start at around R1.5m, but flats and vacant land are in short supply.

“There are a few residential developments in the pipeline, however, the town’s projected growth is beyond the projected increase in supply, and there is already a dire shortage of affordable housing,” Neufeld said.

More upscale properties are entering the market too, with two listings currently advertised at more than R50m.

Knysna property prices have also surged to new records, from an average of R2m in 2021 to R3.51m this year. And it’s not just the Garden Route that’s seeing such tremendous growth as the small coastal towns closer to Cape Town are also seeing record prices.

Hermanus, which is considered another hot semigration destination, saw its median house price hit R2.51m in 2022.

“We first started to see renewed activity at the beginning of 2021 when people were starting to adjust to the new normal and plan ahead, and there has been a steady and notable upswing since then,” says Brett Sparg, Managing Director for Lew Geffen Sotheby’s in Hermanus.

However the town’s geographical and environmental constraints mean the scope for new development and further physical expansion is limited, Sparg added.

IOL Property