New province emerges as semigration hotspot in South Africa

The Western Cape may be a consistent magnet for semigrants, but areas in the Eastern Cape, including Gqeberha, are emerging as hotspots.

This was revealed in Just Property’s expectations for the property market in 2025.

Paul Stevens, CEO of Just Property, said that South Africa’s economy is beginning to show signs of recovery, with inflation declining from 5.3% at the start of 2024 to 2.9% in November.

The decline is well below the Reserve Bank’s target of between 3% and 6%, which has seen interest rates cut twice in the second half of 2024.

“While these cuts were smaller than anticipated, they signal a trend that should bring relief to consumers,” said Stevens.

If inflation numbers remain at this level, he anticipates at least a 1% reduction in interest rates throughout 2025, which would reduce financial pressures on households and boost market activity.

The formation of the Government of National Unity (GNU) has also led to optimism, improving South Africa’s currency and public sentiment.

“The GNU has given people and investors hope for the future.”

That said, there are still several challenges, such as high unemployment and poor fiscal management by the government.

Looking at the property market heading into 2025, Stevens said that semigration continues to shape the market of coastal cities and towns.

Notably Langebaan, Hermanus, and Plettenberg Bay and continuing to draw buyers.

Although the Western Cape is seen as the nation’s semigration hotspot, urban areas in the Eastern Cape, including Gqeberha and St Francis Bay, are also emerging as desired spots amid significant investments in infrastructure.

This is not the first time that Gqeberha has been named as a semigration hotspot.

Pam Golding Properties previously said that as young buyers, renters, and investors flocking to the city

Pam Golding said that professionals and families are looking to Gqeberha seeking better lifestyles and economic opportunities, which is driving semigration from provinces like Gauteng.

Massive investments are going into the city, such as a R3 billion auto manufacturing plant for Stellantis, a R105 billion green ammonia plant for Hive Energy, a R4 billion Volkswagen expansion in Kariega to add a third production model by 2027, and a R13.6 billion Liquified Natural Gas terminal.

Other trends

Stevens noted that security estates and sectional title properties are increasing in popularity due to safety concerns and affordability.

“Developers are focusing heavily on gated communities, which appeal to a wide demographic,” said Stevens.

He added this trend will continue to grow, reshaping the landscape of urban living.

“Freehold properties still make up a large portion of the properties in South Africa, but the trend is fast moving towards sectional title and estates.”

The high-end/luxury market also remains robust, particularly in the Western Cape, Gauteng, KwaZulu-Natal and the Northern Cape.

Stevens attributes this is due to cash buyers who are less sensitive to interest rate fluctuations.

“This segment is resilient and continues to perform well, driven by both local and international demand.”

Although the Western Cape now has a battle with other semigration hotspots, it remains the nation’s emigration hotspot.

Foreigners are primarily snatching up property in Cape Town, while smaller towns in the Western Cape, such as Hermanus, Knysna, and Plettenberg Bay, are also becoming popular for their relaxed lifestyles.

“Foreign buyers are drawn to the combination of natural beauty, infrastructure, and affordability,” said Stevens.

Fears remain

Although the outlook for South Africa has improved, challenges still remain. Affordability is a persistent issue for first-time buyers.

“My best advice is to ensure you save towards a 10% deposit and get prequalified by a mortgage consultant before you start looking,” said Stevens.

“This means you’ll know what you can afford to purchase, taking into consideration what the current interest rate is, and not what it could be if they continue to decline.

“Not planning for worst-case scenarios caused problems for many first-time buyers, who enjoyed 2020/21 interest rates as low as 7%. When they rose, it put many homeowners into financial difficulty.”

Another risk for investors is poor municipal service delivery in certain areas, with poorly maintained services impacting property values and long-term investment potential.

“This is a key criterion to be assessed before investing in a property.”

“If the bulk infrastructure in an area is busy collapsing, unfortunately, property values will, in all likelihood, not increase and could very well decrease.”

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