Luxury house prices soar as demand surpasses supply

Published April 2025

If you have your eye on a luxury home in one of Cape Town or Gauteng’s sought-after high-end suburbs, make an offer sooner rather than later, says Bradd Bendall, BetterBond’s National Head of Sales. “The demand for luxury homes, particularly in the Western Cape and within Gauteng’s lifestyle estates, is on the rise as foreign investors and returning expatriates see value in investing in a stable property market offering a considerable return on investment.” With demand increasing, it’s only a matter of time before it outstrips demand, pushing up house prices at this end of the property market.

BetterBond has reported increased buyer activity at the upper end of the market, with bond approvals for homes of more than R3 million increasing by 15.23% in the past year. These bonds now account for 10% of all bonds approved by BetterBond over the past 12 months.

The surge in demand reflects in the price inflation of luxury homes, says Bendall, especially in the Western Cape. “As reported in the recently released Knight Frank Wealth Report, luxury house prices of prime residences in Cape Town increased by 5.1% in 2024, ranking it 32nd globally. The continent is fast establishing itself as a hub for wealth creation, and as more people fall within the high-net-worth individuals (HNWI) category, we can look forward to greater sales activity within this segment of the market. Prices will continue to rise as demand surpasses supply.”

Cape Town is well known for its luxury properties, with homes along the Atlantic Seaboard easily selling for upwards of R100 million. Last year, a Camps Bay home was on the market for R700 000 million, making it the most expensive home to ever be listed in the country. “The Mother City is a top global destination, racking up numerous awards from Best City in the World (Telegraph Travel Awards) to Best City for Food in the World (Conde Nast Traveller Readers’ Choice Award). These accolades, as well as its reputation for its natural beauty, laidback lifestyle and excellent infrastructure and service delivery, make Cape Town a desirable location for investors and buyers relocating from other provinces.”

It’s not surprising that, as reported by Lightstone, the city also boasts the highest percentage of sales within a month of the home going on sale. “This comparatively short time on the market underscores the growing demand for homes in many parts of the city,” says Bendall. Cape Town’s property prices have surpassed those of Johannesburg since 2021. It is also the city where the average sales price is closest to the listing price, he adds. The region is home to the second highest number of HNWI, with many choosing to live in Paarl, Franschhoek and Stellenbosch in the nearby Cape Winelands.

Cape Town may be the star performer when it comes to luxury buyers, but there is also a strong demand for high-end homes in KwaZulu-Natal, Gauteng and parts of the Northern Cape, notes Bendall. “In Gauteng, the country’s economic epicentre, there is a considerable demand for homes in upmarket lifestyle estates. In Blair Atholl Golf and Equestrian Estate, for example, homes are on sale for up to R67 million. According to Property 24, the average sales price for homes in this estate offering equestrian facilities, walking trails and access to a championship golf course, is R15.4 million. Well-established suburbs such as Sandhurst also get the nod. Offering stately homes on expansive grounds, Sandhurst has properties listed for up to R150 million for a seven-bedroom home.

KwaZulu-Natal has plenty to offer, from pristine beaches to unsurpassed natural beauty. Recent investments in the area, including the R2 billion Club Med South Africa resort development, has bolstered the appeal of this coastal province. “We are seeing buyers relocating from nearby Gauteng to move to a lifestyle estate that offers sea views, top-tier amenities and family-friendly activities,” says Bendall. Umhlanga is one of the popular suburbs for foreign and local buyers, with a home in La Lucia currently listed for R115 million.

“Buyers of luxury properties are less affected by changes in the prime lending rate. They are also not as concerned about affordability - they are largely motivated by their lifestyle choice or investment portfolio,” adds Bendall. With signs pointing to a recovery of the property market as well as an accommodating rates environment, BetterBond expects the demand for high-end homes to intensify, and this in turn will drive up luxury house prices. “South Africa offers a comparatively stable investment haven as well, given the prevailing geo-political tensions playing out in other parts of the world.” This combined with an accommodative lending environment, with further cuts in the prime lending rate expected in upcoming months, should see the luxury market continuing to perform well.