Hout Bay Opportunities As Housing Shortage Drives Price Growth
Category News
As the Cape Town and Hout Bay property sector continues its strong activity, these markets are now coming under unprecedented pressure, largely due to housing shortages which affect both sales and rentals.
Factors such as limited stock, strong demand from local and international buyers, and outdated policy frameworks are combining to create the perfect storm, pushing property prices across all segments to record highs.
Property availability is constrained across the board. Entry-level homes in the R3m to R8m range are seeing fierce competition which often leads to bidding wars. Mid- to upper-end homes in the R8m to R25m range are also appreciating rapidly due to a lack of quality listings. The rental market is equally tight, with extremely low vacancy rates pushing up rental prices and limiting tenant choice.
What is Driving this Shortage?
Geographical Limitations. The Cape Peninsula has reached maturity, with little to no virgin land available for new residential development, thus creating a long-term structural cap on housing supply.
International Migration. In addition to local semigration, geopolitical instability and ineffective economic policies in Europe, Germany in particular, are prompting a skills migration to Cape Town due to its shared time zone, and lifestyle and economic appeal.
Outdated Capital Gains Tax (CGT) Exemption. The outdated R2 million primary residence exemption, unchanged since 2000, should be approx. R7.6 million today when adjusted for inflation. This discourages retirees from downsizing, keeping larger homes off the market.
Mid-Year Market Statistic (1 January - 29 July 2025)
In Hout Bay, a total of 146 properties (freehold and sectional title) have sold this year so far at an average price of R5,435,918 with properties taking on average 82 days (11.5 weeks) to sell, much faster than the market averages due to limited supply. Freehold properties (87 units sold) usually take slightly longer, around 107 days (just over 15 weeks), but achieved a significant average sale price of R6,797,713. Sectional titles are selling much faster, within 45 days (6.5 weeks) at an average price of R3,427,847.
In Llandudno 5 property sales have been recorded at a significant average price of R22,760,000, and spending 180 days (25.7 weeks) on the market, not unusual for high value properties.
What these statistics demonstrate is that buyer urgency remains high while low stock is restricting overall market activity, thus presenting significant opportunities.
Key Takeaways for Buyers and Sellers
The market presents a unique opportunity for sellers, particularly in the R3m to R8m range, and in retirement-oriented housing segments. Given the fierce competition for limited stock, Buyers should note that cash or pre-approved finance offers are increasingly prioritised. For investors, rental yields are strengthening due to chronic undersupply, thus presenting attractive opportunities for investment.
As market leading property specialists with a considerable track record of success, Seeff provides the right expertise and services to enable buyers, sellers and investors to navigate this competitive landscape and achieve their property goals. Please feel free to contact us today to discuss your property aspirations!
Author: Seeff Hout Bay & llandudno
