Even with the significant slowdown in the net “semi-gration” into the Western Cape, doubtful at this stage, the province will still likely be the outperforming residential property region in 2026.
This year, the Western Cape will once again be the outperformer in terms of house prices and residential rental growth, says John Loos, an independent economist.
He says some have argued that the deterioration in relative home affordability should ultimately stem the Western Cape’s property market outperformance, and indeed, at some point, one would expect this.
“There have even been claims of a net ‘reverse semi-gration’ trend emerging, whereby the migration of skilled and more affluent households from South Africa’s most populated province, Gauteng, to the popular Western Cape Province, has reversed.
“Such a reversal is unlikely at this stage. However, as the City of Cape Town and its immediate surroundings have become less affordable, a spreading out of “semi-gration” appears to have been taking place.”
This was in the latest Household Sector Economy note pertaining to expectations regarding the Western Cape housing market and its ongoing outperformance.
Shift has been happening for some years
The independent economist says this has benefited the Southern Cape and West Coast housing markets relatively speaking.
He says this shift has been happening for some years, and may have been driving a narrowing in the outperformance gap between the City of Cape Town House Price Index and the overall Western Cape House Price Index from 2017, this gap having turned negative in 2022 (using January 2010 as the index base month).
“The trend points to the province’s intra-regional house price growth outperformance for some years, having been outside of the City of Cape Town. More such outperformance from the smaller regions is expected in 2026.”
Strong overall net population inflows
Both Gauteng and the Western Cape, two of the major 3 provinces in terms of economic size (KZN being the other major one), have strong overall net population inflows, Loos says.
However, he says the popular South African term “semi-gration” tends to refer implicitly to a portion of the more skilled, middle-to-higher income part of the population relocating to different regions in search of opportunity or a better quality of life.
“Much has been said in recent years around a strong net ‘semi-gration’ rate in the direction of especially the Western Cape, and to a lesser extent, KZN north coast and others, and a net outflow ofsuch people out of Gauteng.
“But over the past few years, there has been some talk of a ‘reverse semi-gration’ trend emerging, whereby some believe that the migration of skilled and more affluent households from South Africa’s most populous province, Gauteng, to the popular Western Cape Province, has reversed.”
Relative home affordability
According to the note, an argument around the relative home affordability between these two major property regions is advanced as one key reason for reverse semigration. And indeed, it says the Western Cape’s relative affordability of housing, both for home buyers and tenants, has deteriorated significantly in recent decades.
“This is to a significant degree a reflection of its relative popularity as a place to live, but also partly reflective of greater land scarcity in and around the City of Cape Town and others relative to especially Gauteng’s landlocked metros.
“Western Cape home values have shown a major relative affordability deterioration. Using StatsSA house price data, the average Western Cape house price has risen by 179.6% from January 2010 to September 2025, compared to a far slower 79.7% in the case of Gauteng and 76.7% in KZN (the three major housing markets).”
On the other hand, Loos says Western Cape Residential Rentals, too, have shown a major relative affordability deterioration.
He says the rental market has shown a similar relative affordability deterioration in the Western Cape.
“The Western Cape CPI (Consumer Price Index) for Residential Rentals has inflated by 128.6% from January 2010 to January 2026. By comparison, Gauteng has inflated by a far lesser 63.8% over the same period, and KZN by 76.9%.”
Little evidence of “reverse-semigration”
But there is little evidence of “reverse-semigration,” the independent economist says.
But to date, he says he has seen little evidence in any data of such a reversal in semi-gration, although good data on the matter is admittedly difficult to come by. “Yes, it is true that in any given period, semi-gration of households is taking place in both directions.
“But it has appeared for many years that the Western Cape has a strong net inflow (inflow minus outflow) of skilled and higher-income semi-grants, while Gauteng and others tend towards a net outflow.”
Wise Move, a company offering relocation solutions, published its 2025 Migration Report last year, citing its own 2024 data, and at that stage pointed to a very strong net outflow from Gauteng and a net inflow into the Western Cape.
These stats are interesting, says Loos, because such companies probably largely relocate skilled middle-to-higher income households.
Sustained large house price differentials between regions within countries are a frequent occurrence
In many countries, Loos says, one sees certain prime cities with property values far exceeding those of other regions in the same country. He says one only has to think of London versus other regions in the UK, and the differential can be sustained on an almost permanent basis.
“The question is, at what stage does the affordability differential become so extreme that it eventually does lead to a curtailing of investor interest in property in the less affordable region, to the extent that its outperformance in terms of house price and rental growth comes to an end?”
While that point must ultimately come to the Western Cape market, the economist says the question of when and at what price level is not easy to answer, because much will depend on the relative economic performances of the provinces.
The Western Cape has a more active property market outperformance driver than current semi-grants, Loos says.
“I believe that many people place too much emphasison current semi-gration inflows in explaining what drives the Western Cape’s housing market. The importance of the past two decades of net-skilled and affluent semi-grant inflows into the Western Cape must be emphasised here.
“This has meant a better cumulative build-up of the province’s skills and purchasing power base. The cumulative effect of this multi-decade semi-grant inflow puts the Western Cape in the likely position to outperform the rest in terms of economic growth, because a region’s skills base is a key driver of a modern economy.”
Recent data show little sign of the end of Western Cape outperformance
And certainly, Loos says if one views the major provincial house price indices as at September 2025, StatsSA’s latest datapoints, one sees no apparent end to the house price growth performance of the Western Cape.
He says that at 9.3% year-on-year growth, its rate dwarfs Gauteng’s 3.8% and KZN’s 2.7%.
“Admittedly, all three provinces have shown house price growth accelerations of late, a function of all three benefiting in the short run from mild interest rate cutting.”
But an internal shift within the Western Cape (and perhaps along the broader coastline) appears to be playing out, the economist says.
Is Western Cape’s best house price growth now outside of the City of Cape Town?
The note shows that the Western Cape House Price Index from 2010 to its most recent data point, against the City of Cape Town Metro House Price Index over the same period. January 2010 is the base month for both.
“The percentage gap that the City of Cape Town House Price Index built up over the total Western Cape House Price Index was at its biggest early in 2017. From then on, there was a broad narrowing of this performance gap, and around mid-2022, the City of Cape Town index started to show a negative gap relative to the overall province’s index.”
“This suggests that house price growth outperformance within the Western Cape has come more from outside the City of Cape Town Metro in recent years, and may reflect the relative popularity shift within the province towards towns outside of the Metro and its immediate surroundings.
Eastern Cape Coast set to benefit more from semi-gration?
Interesting too is that in Wise Move’s 2025 migration report, the company also reported a net inward migration into the Eastern Cape in 2024, says Loos.
“One wonders whether that is not a sign of the continuation of the perceived trend of semi-gration gradually spreading out along a broader part of South Africa’s coastline. It is only one piece of data, and doesn’t confirm a trend.
“However, I believe that the deteriorating affordability of housing in the City of Cape Town and even the broader Western Cape, ultimately leads to other, previously less-favoured towns along the coast benefiting more from semi-gration as time goes by.”
Last week, the Western Cape-focused Spear REIT reported continued operational momentum in its FY2026 pre-close presentation, driven by portfolio expansion, solid financial performance, high occupancy levels and strong cash collections.