South Africa’s new crisis hurting property sales in major cities

South Africa’s struggles with municipal water and sanitation systems are severely impacting the residential property market.

Although load shedding has been suspended, several areas across the country are now experiencing issues with their water supply.

Persistent water shortages, infrastructure failures, and service delivery issues mean that buyers and investors are questioning the security of essential services.

Reports show that South Africa’s three biggest cities—Johannesburg, Cape Town, and Durban—are dealing with declining water quality and an unreliable supply. Upmarket suburbs in Johannesburg were without water for roughly ten days earlier this year.

In 2023, Johannesburg experienced a significant water crisis, prompting public outcry and raising concerns about the city’s capacity to provide essential services.

Water and Sanitation Minister Pemmy Majondina said that South Africa has seen a drop in the quality and reliability of the nation’s municipal water and sanitation services. Water boards are unable to properly maintain and operate infrastructure due to the R21.3 billion in debt from municipalities.

As prospective buyers look at new properties, reliable water and sanitation services are essential in the decision-making process.

Areas with consistent service are seeing increased demand, while interest in properties in regions known for inconsistent supply is declining.

Due to these major infrastructural challenges, the overall perception of metropolitan areas as viable places to live and invest is eroding.

“The insecurity surrounding municipal water and sanitation is not just an inconvenience; it is a significant concern that affects property desirability and long-term investment stability,” said Richard Gray, CEO of Harcourts South Africa.

“Buyers and investors are now having to critically assess the reliability of these essential services before making any commitments.”

In response to these issues, the Water Services Amendment Bill was proposed by the Department of Water and Sanitation, which aims to improve the management and delivery of water services across municipalities.

This Bill aims to enhance the accountability of water service authorities and reinforce mechanisms for better service delivery.

It also aims to establish a localised water service authority, which would be tasked with ensuring that water supply and sanitation services meet appropriate standards.

One key element of the Bill is the provision for the establishment of localised water service authorities, which would be tasked with ensuring that water supply and sanitation services meet appropriate standards.

The proposed amendments call for greater regulation and oversight, as well as community engagement to identify local water needs.

Although this indicates a push to improve service reliability and quality, uncertainty remains until these provisions are fully implemented, potentially affecting property values in areas with known infrastructure challenges.

Unreliable water supply is also starting to hurt the rental market, where landlords facing high maintenance costs or property damage from inadequate sanitation services are finding it extremely challenging to maintain profit.

This means that landlords are looking for properties with proven infrastructure stability, and avoiding high-risk areas.

Another shift is towards developments featuring alternative water supply systems. Properties with rainwater harvesting, boreholes, and water recycling systems are becoming increasingly appealing to buyers.

This change highlights the importance of self-sufficiency in the face of municipal failures.

“Market analysts predict that areas experiencing consistent water supply and quality will see property values rise, while those struggling with service delivery may face declining market conditions,” said Harcourts.

“In the competitive real estate landscape, infrastructure reliability will increasingly influence pricing strategies and investment decisions.”

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