Why Cape Town leads pack in residential construction trends

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08-12-2025
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Sunday World
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South Africa’s construction sector is undergoing a significant transformation, with metropolitan municipalities increasingly favouring the development of free-standing homes over flats in the past decade. According to Momentum Investment’s latest Business Pulse, between 2014 and 2023, Between 2014 and 2023, Stats SA’s review of the residential sector revealed that cities have been “building out rather than building up”, focusing on single-unit residential houses rather than multi-unit apartments.

This trend highlights shifting urban dynamics and consumer preferences, as well as the challenges and opportunities facing the residential construction industry. The City of Cape Town emerged as the leader in residential construction during this period, recording the highest number of new residential buildings at 96 725 units.

Tshwane followed with 55 095 units, and Ekurhuleni came in third with 44 320 units.

Cape Town also led in the construction of houses and flats, while Johannesburg recorded the most townhouses built.

Interestingly, flats accounted for only 1% of new residential buildings in Johannesburg, highlighting a preference for horizontal expansion rather than vertical growth.

“Stats SA’s review of the residential sector found that metropolitan municipalities were building out [i.e. building more free-standing homes] rather than building up [flats] between 2014 and 2023,” the report states.

This trend reflects a combination of factors, including land availability, population dynamics, and shifting consumer preferences.

The construction sector showed growth in the third quarter of 2025, with the value of total buildings completed rising by 7.2% quarter on quarter and the value of total building plans approved increasing by 6.2% quarter on quarter.

Residential buildings were the primary driver of this growth, with completions increasing by 11.9% quarter on quarter.

Non-residential buildings also saw a sharp increase in plans passed, rising by 46.1% quarter on quarter.

Cape Town’s dominance in residential construction is particularly noteworthy.

The report highlights that “the City of Cape Town recorded the highest number of new residential buildings (96 725) during the period under review, followed by Tshwane (55 095) and Ekurhuleni (44 320)”.

While houses dominated new builds in Cape Town, granular data shows a shift from houses to flats starting in 2019.

This change is likely driven by the semigration trend, where individuals relocate to the Western Cape for its perceived better quality of life, safety, and governance.

“Flats built were only 1% of new residential buildings in Johannesburg,” the report states, emphasising the stark contrast in construction trends between cities.

The semigration trend has played a significant role in this shift, as more people move to Cape Town and surrounding areas, increasing demand for higher-density housing options.

Looking ahead, several factors could influence the residential sector’s trends. These include population dynamics, urbanisation, shifting consumer preferences, and land availability.

The report highlights that “economic conditions which will influence affordability [e.g. a lower inflation target which is expected to lead to lower long-term interest rates] could improve affordability”.

The government’s objective to create dynamic and integrated cities, driven by Operation Vulindlela, is also expected to play a role in shaping the residential sector.

This initiative aims to address structural challenges and unlock economic growth by improving infrastructure and municipal services.

The report notes that “potential residential property changes could have an impact on municipal services, infrastructure, and revenue”.

The construction sector’s growth in the third quarter of 2025 is a positive sign for the economy, but experts caution that sustained investment and affordability improvements are essential for long-term stability.

Urbanisation and population dynamics are key drivers of residential construction trends.

As cities grow and evolve, the demand for housing changes, requiring municipalities to adapt their strategies.

Land availability is another critical factor in residential construction.

As cities expand, finding suitable land for development becomes increasingly challenging.

The report emphasises that “land availability” will play a significant role in shaping future trends in the sector.

Cape Town’s leadership in residential construction is further underscored by its ability to adapt to changing trends.

“While houses dominated new builds in Cape Town, the granular data shows a switch from houses to flats from 2019, likely due to the semigration trend,” the report explains.

This adaptability is crucial for meeting the needs of a growing and diverse population.