Foreign property investors squeeze locals out of the property market

Cape Town’s property market has increasingly drawn foreign investment, reshaping local dynamics and straining affordability. Since 2010, residential property prices have risen by 160%, with the average home now valued at ZAR 3.5 million.

Foreign buyers, injecting over R1 billion into the market in the first five months of 2025, have fuelled this escalation, particularly in high-demand areas like the Atlantic Seaboard and City Bowl, where luxury properties fetch between R15 million and R60 million. This influx has squeezed local buyers, especially younger South Africans. In the City Bowl, even studio apartments now exceed R1 million, pushing homeownership beyond reach for many.

In each the top ten most valuable areas of the city, over a third of all properties are foreign-owned, often by people with no South African residence at all. The concentration of foreign purchases in sought-after neighborhoods has intensified price pressures, deepening the affordability gap. South Africa’s permissive legal framework underpins this trend.

Foreigners face no major restrictions on property ownership, though they must navigate exchange control regulations and employ qualified conveyancers. Looking forward, prices are forecast to climb 5% annually through 2026, with prime suburbs likely to outpace this rate amid persistent demand. While foreign capital has invigorated the market, it has amplified challenges for residents. Sustaining growth will require addressing these tensions.