'It's horrendous!': Inside Cape Town's rental nightmare

The popularity of Cape Town as an ideal place to go on holiday or to live and work is well known, but this elevated status is now becoming a double-edged sword.

Ask anyone who has semigrated from other parts of the country to settle in Cape Town, and they'll tell you how shocked they were when looking for a place to rent, in or close to the City Bowl and the Atlantic Seaboard.

Let's face it, Cape Town does have it all: sun-kissed beaches, breathtaking views in all directions, a melting pot of cultures and historic buildings, not to mention its centrepiece - Table Mountain.

But finding affordable accommodation, irrespective of your income, is becoming a challenge, both for Capetonians and newcomers to the city.

"It's horrendous," said June Viviers*, 50, referring to her recent hard slog finding accommodation in the City Bowl after her move from Durban.

"I knew accommodation was going to be a challenge, so I moved into an Airbnb for two months to give me time to look. Wow! I must have spoken to about 50 agents, but even though I booked 12 viewings, I never actually got the chance because agents would tell me the place has been taken, and that is because people make a decision based on pictures they see of the place without even viewing it. That's how desperate we all are.

"I was so worried that I may have to move back to Durban, but eventually I found the place I stay at through a contact of mine," she said.

Comparison

She lives in a two-bedroomed flat in the City Bowl and pays R23 500 a month, a far cry from the R9 000 being charged for something similar on Durban's Berea.

"Apart from the shortage and high price of accommodation in Cape Town, you have to earn three times more than your rent, plus you have to pay a double deposit, and they do credit checks, so that adds to the problem," she said.

"Overpriced" is not a term those in the property market like to use when discussing the exorbitant rentals that are being asked for apartments within the City Bowl and along the Atlantic Seaboard.

Agents say it is merely market forces at play, and that Cape Town, like any other picturesque city in the world that has everything that opens and shuts, commands the prices it serves up.

Independent Media Property spoke to Mfundo Mabaso from FNB Home and Structured Lending to get an understanding of the challenge and how it can be tackled.

He said the biggest drivers of escalating rentals in Cape Town are the influx of high-net-worth individuals from other parts of the country and abroad, as well as the high demand for Airbnb.

Euros vs Rands

"For digital nomads, the strength of the pound or the euro which they earn makes Cape Town affordable, even though rent is disproportionately high,” he said.

"Covid created digital nomads, young South Africans earning in dollars or pounds who have the buying power of a foreigner, where they are happy to pay R18 000 for a studio in Cape Town, while in Sandton they'd pay R10 000.

"If you look at it, everyone coming to Cape Town wants to be in close proximity to the CBD, which is very attractive, which then spikes the demand from high-earning individuals, making it easier for owners to raise their rents.”

He gives the example of a client, a couple with three children from Pietermaritzburg who have taken up work in Cape Town and now need to make some hard choices.

"They sold their home for R2 million, and now they can only afford to buy an apartment if they want to be close to the CBD for work, unless they're prepared to drive 50km out of the city to stay in a place that gives them a sense that they're in a comparatively good area.

"But this then means extra time and money to commute each day, as well as additional costs like having someone to help fetch the kids from school.

What you'll give up

"These unforeseen costs mean that how their life was configured before is now fundamentally different. If they settle for an apartment nearby, they'll have to give away a bedroom and square metres, and there will be no garden," he said.

Mabaso said government-subsidised housing and collective buying are seen by many as solutions for the lower and middle ends of the housing market.

John Loos, senior economist at FNB, said land scarcity in Cape Town is not a problem experienced by its nearest property rival, Gauteng.

"Land is scarce in Cape Town, with a mountain in the middle and the sea on a few sides and high-value farmland surrounding it, which is not being released or turned into residential property at a quicker rate.

"Both Gauteng and Cape Town have rapid population rates, but the difference with Cape Town is a bigger influx of high-income people, affluent retirees and the high rate of Airbnb, and this keeps the supply of normal rental properties limited.

"This is what happens when a place becomes the flavour of the month. It is very simple, really, and is reflective of a prime city that is more popular than other places in the country," he said.

Loos said the city can mitigate this by rapid and orderly densification and the creation of high-density nodes outside the city precinct.

He said there has been talk about turning Bellville into a second CBD, with high-density housing along major transport corridors such as Voortrekker Road, which, if implemented, would create demand for a state-of-the-art mass public transport system.

Rob Steffanutta, head of development at the ClaremartGroup says as these prime areas reach saturation, Cape Town’s southern suburbs could become “the next major frontier for rental market value”, adding that these suburbs still offer “significant parcels of available development land, where the savvy investor could get in under R50K per m2 for construction”.

* Not her real name