South Africa’s property market shows signs of recovery amid city pressures and sector adaptation

Cape Town has been at the epicentre of much of this recent debate. According to recent reports, the city’s population has surged to nearly five million, fuelled by both local migration from other provinces and an influx of international digital nomads. The result has been a property boom on the Atlantic Seaboard, where values have climbed by more than 160% since 2010. Yet such growth comes with trade-offs, housing affordability is under strain, and infrastructure is battling to keep pace. In response, the City of Cape Town has committed R40bn in public service investments, with part of the funding sourced from property tax revenues targeting high-value homes.

“Cape Town’s situation underscores a broader truth in the South African property market: rapid growth in high-demand areas can strain resources and price out segments of the market,” says Goosen. “For buyers and investors, this highlights the importance of looking beyond the traditional hotspots to emerging areas where value, lifestyle, and infrastructure are better balanced.”

Beyond Cape Town, there are growing signs of recovery in the national residential property market. Industry experts, including economists and leading agency heads, point to a combination of anticipated repo rate cuts through 2025, gradually improving macroeconomic conditions, and an uptick in demand for mid- to lower-priced homes. Areas within the Western Cape, Gauteng, and KwaZulu-Natal are seeing healthy interest, especially where properties feature alternative energy solutions such as solar, now viewed as a must-have in the wake of continued energy supply challenges.

Goosen notes that the first-time buyer segment is particularly active. “The transfer duty threshold of R1.21m remains a game-changer for many first-time purchasers. Buyers are using this to their advantage by targeting properties just under the threshold or stretching budgets to access homes with better long-term potential. This is boosting activity in more affordable suburbs and towns.”

While residential optimism is growing, South Africa’s commercial property market is also showing signs of resilience. The overall real estate sector is valued at over R8.8tn, with R1.9tn in commercial and R6.9tn in residential property. Occupancy rates in retail and office spaces are gradually improving, supported by urban regeneration projects and flexible leasing arrangements that appeal to both tenants and landlords. Meanwhile, industrial real estate, data centres, cold storage, and student accommodation are emerging as growth areas, reflecting both global investment trends and local demand patterns.

“This diversification within the property sector is healthy,” Goosen says. “It creates multiple entry points for investors and spreads risk across different asset classes. For example, the surge in demand for data centres and cold storage facilities is tied directly to South Africa’s expanding digital economy and agricultural export markets. These are structural trends unlikely to reverse in the short term.”

Yet, the picture is far from uniform. While some regions and sectors are enjoying momentum, others are lagging. High-interest rates over the past two years, combined with elevated living costs, have placed strain on household budgets, slowing transaction volumes in certain price brackets. Additionally, infrastructure backlogs in both urban and rural areas can dampen investor confidence, particularly where service delivery issues persist.

For sellers, Goosen advises realistic pricing and targeted marketing. “In the current climate, the days of setting an aspirational price and waiting for the market to catch up are over. Buyers are informed, cautious, and value-driven. Properties that are priced in line with market realities and that clearly demonstrate their unique selling points, such as energy efficiency, location convenience, or work-from-home suitability, are the ones moving fastest.”

Looking ahead, the anticipated interest rate cuts could serve as a strong catalyst for further market improvement. Lower borrowing costs are expected to stimulate demand, particularly among first-time buyers and investors who have been waiting for more favourable lending conditions. Combined with ongoing urban development projects, an increasing focus on sustainability, and the resilience of niche property sectors, the outlook for 2025 is considerably brighter than it was during the height of the interest rate cycle.

Goosen believes the key to navigating this evolving market is flexibility. “Whether you’re buying, selling, or investing, it’s about recognising that opportunities exist across a range of locations and property types, not just in the traditional hotspots. The South African property market is dynamic, and success comes to those who adapt their strategies to match shifting demand, economic realities, and lifestyle trends.”

In short, the property market in South Africa today is defined by rising strain in high-demand cities, recovery signs in residential sectors, and reinvention in commercial and niche markets. For buyers and investors willing to look beyond the obvious and adapt to changing conditions, 2025 could present some of the best opportunities seen in years, concludes Goosen.