ResiLogic
Posts
Cape Town’s Rental Crisis: Why Rent Controls Won’t Work — and What Will

Cape Town’s Rental Crisis: Why Rent Controls Won’t Work — and What Will

August 28, 2025

Nearly 80% of rental agents in PayProp’s 2025 State of the Rental Industry report say soaring Western Cape rentals have made housing unaffordable for many tenants, forcing them to move elsewhere.

Cape Town’s City Bowl and Atlantic Seaboard are at the epicentre: global demand, local supply constraints, and lifestyle appeal have pushed rentals beyond the reach of average households. Calls for rent controls or limits on short-term rentals (Airbnb) are growing louder.

But are these the right solutions?

❌ The Problem With Rent Controls

It’s tempting to think capping rentals will ease affordability. But global experience (New York, Berlin, San Francisco) tells a different story:

Supply collapses: Developers stop building rental stock.
Stock quality declines: Landlords cut back on maintenance and upgrades.
Affordability worsens long-term: Rent-controlled units benefit existing tenants but shut out newcomers.

Cape Town already has tight land supply in its premium nodes. Adding rent controls would only further reduce incentives for new investment.

🏗️ Why Supply Can’t Keep Up in Premium Nodes

Even without controls, the City Bowl and Atlantic Seaboard face structural limits:

Land scarcity: Few large parcels left for meaningful new builds.
High construction costs: Mid- to high-rise developments struggle for viability below R45k–R60k/m².
Global demand: International buyers and expats push values higher, regardless of local affordability.

That’s why, even as rentals surge, new supply simply can’t keep up in these areas.

🌍 The Real Issue: Geography of Jobs + Housing

This isn’t just about rental prices. It’s about the mismatch between where jobs are and where affordable housing exists.

Jobs are concentrated in the CBD, City Bowl, and Atlantic Seaboard.
Affordable housing is concentrated in the Northern Suburbs and Cape Flats.
The result? Long, costly commutes — often 2+ hours a day — which reinforce inequality.

As long as Cape Town’s economy clusters in expensive geographies, rental affordability will remain broken.

🚀 What Will Work

To solve Cape Town’s affordability crisis, we need to think bigger than rent caps.

Decentralise Economic Activity
- Bellville as the “2nd CBD” is a start.
- But we need multiple job nodes across the metro: Northern Suburbs, Mitchells Plain, Khayelitsha.
- Tax incentives, rezoning, and infrastructure must follow jobs, not just housing.
Enable More Density Where Possible
- In premium areas, relax zoning and heritage overlays to allow micro-units, mid-rise infill, and co-living.
- Supply will never match demand fully, but easing restrictions helps.
Transport-Led Solutions
- Fix Metrorail and expand MyCiTi into the Cape Flats.
- If Khayelitsha–CBD was 25 minutes, demand pressure on the Bowl would drop significantly.
Incentivise Build-to-Rent (BTR)
- Encourage REITs and pension funds to deliver affordable rental schemes with capped escalations.
- Better than rent control: align investor returns with tenant affordability.

🎯 ResiLogic Takeaway

Cape Town’s rental crisis is not a problem of greedy landlords — it’s a structural issue of land scarcity, economic clustering, and transport inequality.

Rent controls may feel like action, but they risk strangling supply.
The real solution lies in moving jobs closer to people and people closer to jobs — through new nodes, higher density, and better transit.

High rentals are the symptom. The disease is economic monoculture in a handful of expensive neighbourhoods.

The sooner we spread Cape Town’s growth more evenly across the metro, the sooner affordability will follow.

📩 Stay Ahead of South Africa’s Residential Market
Get weekly insights, trends, and project spotlights straight to your inbox.