Goodbye Cape Town – ‘reverse semigration’ wave hits South Africa
Balwin Properties recently shared its financial results for the six months ending August 31, 2024, revealing a notable reverse semigration shift.
However, it added that demand in the Western Cape is still high, and this will grow in the near future.
Despite the economic challenges, the group noted that developments under construction continued to increase to R6.5 billion, with construction and development costs increasing as the group gears up for increased activity in the second half of the financial year.
Balwin has a development pipeline of approximately 42,000 apartments across the major metropolitan nodes of Johannesburg, Tshwane, Western Cape, and KwaZulu-Natal, with a development cycle of approximately 15 years.
Interestingly, however, is that the group noted that the six months under review showed an interesting reversal in the impact of semigration, with Gauteng regaining its position as the top revenue contributor by region at 49%, followed by the Western Cape at 46%.
This market shift noted by Balwin aligns to a degree with data from Stats SA and Lightstone Properties.
According to a 2024 report by Lightstone Property, one in four homeowners who sell their current home and then purchase a new one opt to move to another province.
The report highlights that approximately 50,000 homeowners participated in this sell-to-buy market in recent years.
Gauteng and the Western Cape emerge as the dominant regions for these transactions, accounting for 48% and 23% of the sell-to-buy market, respectively.
Together, they make up over 70% of this market segment, leaving the other seven provinces to account for the remaining share.
Although the data showed a decline in the number of Gauteng residents choosing to stay in the province, it also showed other provinces, such as the Eastern Cape, Free State, KwaZulu-Natal, Mpumalanga, and Limpopo, experienced even larger declines, with figures dropping between 9% and 15%.
These individuals are largely moving to Gauteng for its affordability, which is still a major draw for international buyers as well.
Stats SA Census data highlights that Gauteng is comfortably the most populated province in South Africa, with 15.8 million inhabitants.
Of these, about 1.1 million are foreign-born, which significantly exceeds the foreign population of the Western Cape, where only 368,000 foreigners reside.
Gauteng’s metropolitan centres, particularly Johannesburg and Pretoria, have traditionally been attractive due to their affordability and economic opportunities.
Johannesburg, in particular, is the most affordable major metro in the country, with average property transaction prices of around R1.2 million, below the national average of R1.3 million.
Nearly 77% of 2024’s transactions in the city have been for properties under R1.5 million, with almost half of those below R700,000.
This affordability is a key factor in why many foreigners, particularly those returning to South Africa after living abroad, choose Gauteng.
However, Balwin noted that the group reported that demand in the Western Cape remains exceptionally strong, with land contracted for two new developments during the period as replacement projects for Fynbos (which was sold out) and De Aan-Zicht.
Data from Lightstone Property’s 2024 report also shows fourteen of the top fifteen towns experiencing a net gain in new homeowners are located in the Western Cape, further emphasising its appeal.
This illustrates that while Gauteng continues to be a stronghold for foreign immigrants and locals from neighbouring provinces due to its affordability and economic opportunities, the Western Cape is rapidly catching up, thanks to its scenic appeal and growing foreign interest.