The Cape’s Department of Tourism published the Tourism Amendment Bill on Monday, April 15. Following its publication, the public has 60 days to submit comment before the Act can be signed into law. The Bill, which proposes to implement regulations around short-term rental models such as Airbnb, has seen much criticism for its potential to throttle the Cape’s tourism industry. However, it also holds the potential to impact the Cape’s housing market.
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, last year the Cape’s property market already saw prices begin to moderate following an over-escalation in real house price growth that stemmed largely from semigration trends. “The proposed changes to the Tourism Bill hold the potential to lower the Cape’s appeal to both foreigner and local investors alike, therefore causing further moderation in property prices. I am therefore cautious to see what affect this Bill will have if signed into law,” says Goslett.
To explain how this Act might affect the housing market, Michael Hauser, sales associate and letting expert at RE/MAX Living, begins by saying that Airbnb offers niche, low-cost vacation rentals, making accommodation more affordable for travelers. “Without this model, South Africa is likely to become a less attractive option to travelers. With sellers already having been through a tough market this year, and with the newly increased municipal rates as well, they now also face losing potential investors with the new tourism bill. I therefore certainly do not welcome this new regulation,” Hauser explains.
He continues by explaining that the housing market stands to suffer from a potential over-supply of properties that are likely to come onto the market following the passing of this Bill. “As I have noticed though my own experience, the market already saw an oversupply in the rental market following the introduction of Airbnb as many of these clients did not get the expected return on the investment and consequently put the property up for long-term letting again – some even resorted to selling the property. We are likely to see a similar result if this Bill comes to pass,” Hauser adds.
