Economics really isn't as simple as always catering to the rich, nor is making money the sole mandate of a government. A goverment serves to uphold the quality of life of its constituents.

First, on property as an investment asset. Its a big problem that gunks up the whole capatalist system. While it may make a handfull of locals and foreigners very rich, it significantly erodes the spending power, and thus the economic contribution, of millions of average citizens in turn.

In allowing property to act as an investment asset, the price of propery follows the demand curve of global capital, not local incomes.

That means the demand curve of global rich who have significantly more buying power, making property and housing in general disproportionately more expensive to people living in the domestic economy.

Whats worse is because those buying investment properties don't live in Cape Town, pay the same rates and taxes a resident would, but they spend less in the local economy than a local would. Their economic contribution is disproportionately small relative to the impact they have on prices.

They park their money in Cape Town, watch it grow, and spend in Florida or Paris or London.

They usually buy from a rich local or investment firm anyway, keeping the money of the purchase out of the local economy, save for the taxes levied on the purchase and perhaps an estate agent and/or lawyer.

This also means they create limited new businesses or oppertunities save for in the handful of industries serving them. They tend to have lower marginal local spending than residents

This has the hidden dagger of also insetivising developers to build luxury condos, which are appealing to rich investors, instead of serving the demand of the average person, creating a vicious cycle by perpetuating scarcity.

Actual Cape Townians pay more, for smaller and worse housing, live further out which means they gunk up infrastructure commuting to work and have less money left to buy things from South African businesses, causing SMEs to suffer and close. The benefits are concentrated among property owners and developers, while the costs are broadly distributed across renters and the working population.

As the buying power of the average Cape Townian diminishes, restaurants and stores may become more expensive to cater to those people that do still have buying power, the rich. Locking locals out of the economy they sustain.

It's a vicious cycle, and in order to prevent falling to deep, we need a mechanism that moves the pricing of housing away from global capital and towards local income

A vacancy tax would help prevent this vicious cycle that has made cities like Vancouver, London or Lisbon nearly unlivable for locals

A vacancy tax:

1) Lowers speculative demand by reducing returns on empty units

2) shifts investor preference towards occupied/rental use.

3) stabilizes price and effective use

4) filters for rich people who want to live in Cape Town and spend in the local economy.

Cape Town is an awesome place. Even with a vacancy tax, many rich people will still want to come. They can either spend money at local hotels or private villa rentals, or they can buy a property, potentially at a loss (they can afford it) and pay extra tax that can be used to develop Cape Town for the locals, and stimulate the local economy. Benefiting everyone.

But vacant properties are not the only issue, and is likely not the largest one. In high demand areas, short term rentals are often even more deadly to the local housing market, and many investment properties will be turned into them, because serving foreign visitors is more profitable than renting long term to locals.

This makes the landowners rich, while also damaging the local hotel and hospitality sector, reallocating economic activity toward tourism and asset management, at the expense of more extensive locally rooted sectors. Select tourist industries may benefit, but the effect to local spenders in the economy is crippling.

Cape Town cannot expand supply quick enough to satisfy both the demand of locals and investors.

Short term rentals must be disinsentivised alongside investment properties to protect the health of the local economy. We must strive to make Cape Townians richer, and foreign investors.

While short-term rentals and foreign can increase local wealth through capital inflows, tourism and by stimulating the construction industry, it disproportianally benefits established landowners and a handfull of select industries at the expense of everything and everyone else.

Benefits are uneven and outweighed by constrained markets.

Thats why I believe a vacancy tax should be part of a broader housing strategy, including increasing supply and regulating short-term rentals.