Surprising trend hitting small town on the verge of collapse in South Africa
Property prices in Knysna have jumped 37% despite the collapse of government services in the small seaside town.
Several experts in recent months have noted that Knysna is on the edge of collapse, with the municipality suffering from service delivery failures, leadership instability, and a lack of capacity.
The town has been hit with a lack of investment in maintaining and upgrading infrastructure over the past 15 years.
Instead, much of the municipality’s increased spending has gone towards consumption in the form of wage increases.
The situation in the town deteriorated so significantly that the Western Cape Provincial Government dissolved its administration as the Knysna municipality was failing to perform its duties outlined in the Constitution.
Sewage spills, prolonged water shortages, and inconsistent refuse removal were pointed to as signs of the complete collapse in governance.
Despite this, average sales values have risen from around R1.97 million in 2022 to approximately R2.7 million year-to-date in 2026 (about 37%).
This is the feedback from Paul Stevens, CEO of Just Property, who said Knysna isn’t behaving like a normal distressed town.
According to Paul Stevens, this performance sets Knysna apart from other distressed towns. “It’s behaving like a lifestyle-driven, semigration-magnet coastal node—and those markets follow different rules.”
Stevens explained that the town’s resilience is being fuelled by semigration and the increasing willingness of buyers to mitigate unreliable municipal services themselves.
Rather than ignoring the town’s challenges, many residents are adapting to them. “People aren’t overlooking the service issues, but they’re planning around them,” he said.
He explained that living next to a lagoon bordered by forests in a friendly small-town environment is why there’s no shortage of buyers.
For them, the lifestyle value of Knysna outweighs the inconvenience of securing their own services like solar, batteries, water storage, and gas.
Buyers targeting isolated estates with their own services
He added that Knysna fits into the same category as other sought-after coastal towns such as Hermanus, Plettenberg Bay, St Francis Bay, and Langebaan.
“These are towns people aspire to live in, and for semigrants, especially remote workers, retirees, and high net worth buyers, the lifestyle value outweighs the municipal risk,” he said.
This demand has been particularly evident at the upper end of the market. High-value homes in estates continue to achieve multi-million-rand sales, supported by buyers seeking controlled environments with more reliable infrastructure.
Some examples of these estates include Pezula Golf Estate, Simola Golf and Country Estate, Thesen Island, and Belvidere Estate.
Deeds office data shows that annual sales increased from 954 in 2023 and 964 in 2024 to over 1,070 in 2025, even as service delivery failures intensified.
Stevens noted that many of these buyers are later-life movers and retirees, often relocating from Gauteng and KwaZulu-Natal.
“Many of our buyers are relocating from Gauteng and KwaZulu-Natal, and many of them are paying cash or putting down hefty deposits,” he said.
While estates are proving particularly attractive, Stevens warned buyers and landlords that they should plan carefully for ongoing service challenges.
“Estates offer stability in a town where the municipality is struggling. Buyers see them as controlled environments with reliable governance and better-managed infrastructure,” he said.
Despite the surprising property trend, he warned that the situation in Knysna still carries risks for property owners.
“Right now, the market shows no sign of weakening, but it’s wise to bear in mind that if bulk municipal infrastructure were to fail completely, property values could eventually come under pressure.”
However, Stevens believes that as long as there is a strong demand for a certain lifestyle and households invest in private backup infrastructure, Knysna will continue to thrive.
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