Why can’t Capetonians afford Cape Town? It’s not just Airbnb, or foreign buyers, or government failures – it’s all of them at once. News24 spoke to economists, realtors and strategists to explain this crisis simply.
Today, Cape Town is a city where housing and property prices have risen faster than what most residents earn.
This has meant that Capetonians cannot live and work in the city because it is becoming too expensive to rent or buy a place to stay.
Stats SA and other property reports have confirmed that housing prices have increased above inflation in the City.
The annual national residential property price inflation was 7.1% in November 2025. Cape Town was 9.5%, Johannesburg was 4.6%. This means that property prices in Cape Town are increasing faster than in the rest of the country and are nearly double those in Johannesburg, in nominal terms.
This is not a unique problem for a growing city; Cape Town joins cities like London and New York that face similar issues.
But the devil of this Cape Town crisis – which has been allowed to escalate over a decade – is in the multiple drivers, SA’s idiosyncratic features, and the way they interact with the country’s unique history and spatial inequalities.
News24 spoke to economists, realtors and strategists to explain this crisis simply.
What is happening
Analysts distinguish between a housing affordability crisis and a lack of affordable housing crisis.
Dr Allan Davids, senior lecturer in the School of Economics at UCT, explains that affordable housing means those “who earn structurally low incomes for which there is simply no housing that exists”.
The housing affordability challenge means that what “people are paying on housing, relative to what they’re earning, is at an unsustainable level”.
Affordable housing is a long-standing issue in South Africa, which includes previous RDP interventions. Whereas housing affordability is a more recent crisis, Davids says.
Professor Francois Viruly, a property economist, explains housing affordability like this: about 80% of Cape Town households earn, on average, R22 000 a month or less. On that income, they can realistically afford a place of about R700 000-R800 000.
A small basic flat in the city costs at least double that.
Property24 lists the average price of a one-bedroom at R2.6 million. A two-bedroom in the city centre will, on average, cost R4.3 million.
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Property strategist Nathan Scott adds that Cape Town has become “highly selective” to who can afford it.
“It is not universally unaffordable, but it is increasingly inaccessible for local salaried buyers, first-time home owners and middle-income renters,” he says.
Those numbers are not abstract; they show up in very ordinary decisions for people.
Property manager Christina Masureik, who specialises in short-term rentals (STR), says that this creates real pressure for Capetonians.
She says:
People move further from work opportunities, spend more of their salary on rent, share homes for longer, delay buying property, or leave the city altogether.
“Long commutes, transport costs, and reduced quality of life then become part of the problem,” says Masureik.
Scott says what we are seeing now is “a market that works perfectly for those with capital, but shuts out those relying on a standard South African paycheck”.
New housing entrants are then forced into the rental market rather than into the owner-occupied market.
But even here, the market has forced prices out of reach for most people due to excessive demand, the transition to STRs, and the appeal to digital nomads.
Good problems, bad consequences
The pull to live in Cape Town for South Africans and international visitors is first, its location.
“The city is desirable because of its lifestyle and natural beauty,” says Masureik. That appeal is concentrated in a city “sandwiched between the mountain and the ocean,” Scott adds.
For those moving within South Africa, a functioning city is a major appeal, given the state of the country’s other metros.
“Buyers are not just purchasing a home; they are buying into a functioning municipality,” Scott says.
Davids adds that what Cape Town is reckoning with:
Is the consequences of good economic performance, but surrounded by other places that have poor economic performance.
“The single biggest thing that I think could help Cape Town, on that front, is a revival of prospects in other cities in this country,” he says.
The simple solution to this crisis is to supply more houses – but that requires an evaluation of the key drivers, because supply solutions differ for each driver of the crisis.
STRs and Airbnbs
Layered on top of this, the city faces an influx of foreign investors, digital nomads and Airbnb demand.
Scott says:
Airbnb (and short‑term rentals) didn’t create the problem; it amplified an existing shortage.
Masureik agrees, saying that it is “rooted in decades of spatial inequality, limited well-located housing and slow delivery of affordable developments”.
She also points out that a spare room or granny flat let out seasonally is very different from large-scale commercial operators acquiring multiple units purely for STR use. She estimates that these listings make 1% of the total housing market.
She warns that lumping all STR activity in one category can distort the debate and lead to poor policy responses.
David says that STRs and Airbnbs are anecdotally increasing, as the data on this is lacking.
This means that properties that would normally be rented out to those who work in the city are being taken off the market. Owners think they can get more money by commercialising their units. (Masureik is quick to add that this is not always true.)
A policy proposal in the works aims to differentiate commercial properties from other STRs, so that they pay higher commercial rates, Davids says.
Importantly, without clear and reliable data, solutions for this driver are limited.
Foreign buyers
For foreign investors, the market is attractive because of exchange rates, where local interest rates may not be as important and where affordability in rands is less of an issue.
Scott says: “In the first half of 2025 alone, international buyers spent over R1 billion on Cape Town property.”
Viruly adds:
The local buyer will never be able to compete against the foreign buyer who comes in with funding which is not based on South African interest rates.
The challenge with these buyers is that they push up property demand, leading to price increases above what they should be, while some of those investors do not contribute to the city’s economic life.
Some homes are even left vacant for long periods of time. Davids says that these “financial assets” then benefit from rising values – in the current market, the longer you hold on to the property, the more its value increases relative to what you paid for it.
He suggests that maybe the city “could look to introduce something like a vacancy tax” – similar to what New York recently did. Importantly, that revenue must then be ring-fenced for housing-related projects.
Masureik highlights that a key tension here is that tourism is a major part of the Cape Town economy – “the challenge is finding a model where tourism growth and local housing access can coexist”.
The government bloc
While land is scarce – because of the mountain and sea – city approvals are also slow, with public land often sitting underused at both the national and local government levels.
Davids says that apportioning blame and petitioning the government need to happen at the appropriate level.
He says:
If you’re asking the city to do something that sits with national, then you’re going to be disappointed.
Solutions involving broad taxes and bans on foreign buyers occur at the national level, including the release of nationally-owned land.
At the city level, local government can influence by making certain types of land available, speeding up city-level approvals, ring-fencing budget and planning better, from transportation infrastructure to local legislation policies.
Viruly adds that the density – building high-rise buildings – must also be part of the solution.
Critics worry this will spoil the natural beauty of Table Mountain and the Atlantic Ocean, but he argues that without building up in well-located areas, the city simply pushes people further out.
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The inclusionary housing policy, which Mayor Geordin Hill-Lewis recently warned about, is not a silver bullet but should be part of the local government toolkit mix, Viruly says.
The policy requires that a percentage of units in new developments be affordable housing.
“If we’re going to resolve this, we need a city that takes a pro‑housing policy – whether from a planning perspective or infrastructure perspective,” he says.
No quick fix
Cape Town’s current demand-centred market means that “the only way we can really address this is by pushing up supply,” Viruly emphasises.
All analysts agree that even if every measure to resolve this crisis is taken today, it won’t be solved anytime soon.
Davids says:
It’s probably going to get worse before it gets better.
He says it takes a while for properties and infrastructure to be built, even longer for policy interventions to come through, and all this happens while the city tries to balance economic growth with more equitable and affordable housing.
There’s very little that can be done in terms of “quick wins”.
But whatever happens, it must start now.
