Should foreigners be allowed to buy South African property without restriction? It is a question being asked with growing urgency in local communities, particularly here in the Western Cape.
While headlines focus on the eye-watering sums paid along the Atlantic Seaboard, the reality goes much deeper. In coastal villages like Kommetjie and Scarborough, foreign buyers have changed the landscape. Five decades ago, Kommetjie was a sleepy holiday town, and Scarborough was barely developed. Today, luxury houses and sprawling developments dominate parts of the coastline, changing the character of communities where generations of local residents have lived. Giant mansions block sea views.
And this trend is no longer confined to affluent coastal suburbs.
Earlier this year, while visiting Vanrhynsdorp, locals told me how many international buyers are buying property in the town. The same pattern is playing out in parts of the Karoo, where small farms and lifestyle plots are being snapped up by foreign buyers.
SADC neighbours take a far more protective stance. While countries such as Namibia permit foreigners to buy urban residential property, they impose strict controls on foreign ownership of agricultural land. In South Africa, by contrast, foreign buyers can participate in the property market with relatively few restrictions.
The core driver of this squeeze is the difference in purchasing power created by the currency.
A foreign buyer looking at a R5 million home in Scarborough sees a property priced at roughly $270,000 or €250,000 — the cost of a modest one-bedroom apartment in parts of Europe or North America. To a South African earning in rands, however, that same property represents a life-changing financial commitment.
Armed with stronger currencies, international buyers can sometimes afford to pay considerably more than local buyers, pushing prices beyond the reach of South African families.
The human cost of this open-door policy falls particularly heavily on the younger generation. Young South Africans starting families and hoping to buy a starter home and build some generational wealth can find themselves priced out before they even begin.
Compounding the problem is the rise of empty properties and short-term holiday rentals. In places like Scarborough, Kommetjie and Cape Town, some properties owned by foreigners sit empty for much of the year, while others are converted permanently into short-term tourist accommodation.
That removes long-term rental stock from the market, pushes up rents and can turn close-knit coastal communities into seasonal ghost towns.
Of course, there is another side to the argument.
Local homeowners in places like Kommetjie, Scarborough and the Atlantic Seaboard who bought properties decades ago, or inherited them, have benefited enormously from rising valuations. Some have effectively become millionaires simply because they own property in an area that has become highly desirable.
Local municipalities also welcome the expanding rates base that comes with higher property valuations.
So this isn’t simply a question of whether foreign buyers are good or bad for South Africa. They bring money into the country, spend locally and can contribute to the development of areas that might otherwise have attracted less investment.
The question is whether South Africa has the right balance.
Many other countries have introduced targeted controls without shutting the door on foreign investment entirely.
Foreign surcharges and duties: Countries such as Singapore, Australia and Canada impose additional taxes or duties on certain foreign or non-resident property buyers. These measures can discourage speculative buying while generating revenue for government.
Primary residence restrictions: New Zealand has restricted non-residents from buying existing residential property, while allowing exceptions and investment in certain new developments. The principle is that foreign capital should, where possible, add to housing supply rather than simply compete for existing homes.
Agricultural protections: South Africa could also consider a framework that gives greater protection to agricultural land, particularly where productive farmland risks being converted into lifestyle properties.
So where does South Africa’s current trajectory end?
Foreign investment is not the enemy. Nor is there anything inherently wrong with an overseas buyer purchasing a South African home.
But when people with substantially greater purchasing power compete for a finite supply of property, the consequences for local residents cannot simply be ignored.
South Africa needs to decide whether an entirely open property market is really in the country’s long-term interests.
Because if young South Africans continue to be pushed further away from home ownership, the price will be high.
They will not only struggle to buy a home. They will struggle to build the wealth that previous generations built through owning one.
That is a price South Africa’s young people should not have to pay.
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