Cape Town’s property market is increasingly becoming a victim of its own success, with soaring prices, worsening affordability and growing pressure on infrastructure positioning housing as one of the defining economic and political issues of the next decade. University of Cape Town economist Dr Alan Davids shared his thoughts at the recent 2026 LexisNexis Future of Conveyancing Conference at Century City in Cape Town.
Davids said that the city’s housing pressures are not unique, but part of a global affordability crisis reshaping economies, politics and social behaviour. “What makes this wave of rising house prices different is that we’re seeing housing affordability worsen as well,” Davids said, adding that property prices are increasingly outpacing income growth across major cities around the world. He noted research showing that more than half of cities worldwide are now classified as severely unaffordable or impossibly unaffordable, as demand continues to outstrip supply.
Cape Town, Davids said, has increasingly evolved into what economists call a superstar city – a highly desirable urban centre attracting local and international demand while struggling to build enough housing to absorb that pressure. “Failing municipalities and poor service delivery across the country has led to a surge in the demand to want to live in Cape Town,” he said.
He said that data showed a widening divergence between Cape Town and the rest of South Africa’s major metros. While property values in many cities have stagnated or declined in real terms over the past decade, Cape Town has continued climbing sharply. Davids warned that the city’s growing desirability has simultaneously made it increasingly inaccessible to ordinary residents. “If you look at Cape Town towards the middle of the distribution there, that number is tending towards 50%,” he said. This refers to the share of income required for the average resident to afford a bond on a median-priced property. Repayment burdens, higher deposits and stagnant income growth are also delaying home ownership for younger generations. “We’re seeing individuals enter into home ownership much later than they did historically,” Davids said.
Housing occupies a volatile position in modern economies because it functions in multiple ways simultaneously, Davids noted. “It is three things simultaneously,” he said. “It is a consumption good, it is also an asset for us, and it’s financed by debt, a bond.” Rising prices therefore create winners and losers at the same time. Existing homeowners benefit from appreciating asset values while renters and first-time buyers face mounting barriers to entry. “Housing is no longer a sectoral issue. It is likely to be the number one political issue in our economy,” he said, citing cities such as Paris and New York where affordability has become a key election issue.
Davids also referred to what has become known internationally as the “housing theory of everything” – the growing body of research suggesting that housing shortages and affordability pressures now determine almost every aspect of social and economic life. He noted links between rising house prices and declining birth rates, reduced economic productivity and widening inequality. “There’s a striking relationship between fertility and house prices,” Davids said, adding that younger people are increasingly delaying having children because home ownership has become harder to achieve. Restrictive housing supply in productive cities also limits labour mobility and constrains economic growth by pricing workers out of areas where jobs are concentrated.
Urban sprawl is creating additional pressures as residents move further away from economic centres in search of affordable housing. Davids said that longer commuting times and increasing transport costs risk entrenching old spatial inequalities in new ways. “If we’re not really careful to pair this urban sprawl with fast, low-cost and reliable public transport, we’re essentially just going to entrench and recreate apartheid-style spatial planning dynamics in our cities,” he said.
Public debate around housing often focuses on measures such as rent control, restrictions on foreign ownership and taxes on vacant homes, but Davids suggested that the only sustainable long-term solution is increasing supply. “We need to build more housing, and we need to build more housing everywhere,” he said. “We’re going to have to be fine with the fact that our suburban suburbs are now going to have high-rise buildings,” he added.
“While Cape Town offers a compelling case study of the pressures facing growing urban centres, the lessons extend across South Africa. Addressing access to property will require coordinated planning, investment and innovation to ensure our cities remain places where people can live, work and build their futures,” said Leigh-Anne Webster, Head of Product for Workflow Solutions at LexisNexis South Africa.
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