About this site

This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.


In 1994, the new democratic government inherited an environment in which there was not only a large and growing housing backlog in spatially restricted urban areas, but also private sector finance was largely unavailable in the areas corresponding to the affordability of the majority of the population. Nevertheless, the new government set the ambitious goal of building a million new houses for new home owners, with access to individual capital subsidies to cover the cost of a small house with basic services, or to be combined with private credit to facilitate purchase of larger, better constructed homes. Over the years, the subsidy scheme has evolved, with new categories to encourage rental, or location in rural areas.

In addition to the subsidy scheme, a number of new financial institutions were established to mobilize private sector credit, including the National Housing Finance Corporation (NHFC, http://www.nhfc.co.za/), a provider of wholesale credit to banks, non-bank lenders and housing associations; and NURCHA (http://www.nhfc.co.za/), which provides working capital guarantees for small contractors on subsidized housing projects. By 2003, the government and financial sector reached agreement about increasing the volume of home loans to borrowers in the lower income category, while mitigating risk. This Financial Services Charter was signed in October 2003 and serves as a voluntary industry code. See www.banking.org.za/documents/2003/OCTOBER/Charter_Final.pdf

In September 2004 the new Housing Minister, Dr Lindiwe Sisulu

announced a new comprehensive plan for housing entitled "Breaking New Ground" (press release at http://www.pmg.org.za/docs/2004/appendices/040909release.htm).

Key elements of the plan include:

Ø. a move away from quantity of housing to promoting the health of human settlements;

Ø. a focus on creating a single working residential property market; and

Ø. eliminating informal settlements within 10 years, by 2014.

South Africans are overwhelmingly a nation of home owners, but the importance and popularity of rental property is growing. In national surveys, as many as 80 percent of people claim to own their home; many of these reside in rural areas, where the line between "squatters" and "homeowners" is vague. Meanwhile, one in five South Africans rent, with backyard / informal rentals predominating; rentals in well-located inner city areas, however, are drawing more people.

For an overview of the circumstances affecting South Africa housing policy, see Setting the Context: South Africa, prepared for "More Than Shelter: Housing as an Instrument of Social and Economic Development," a Harvard Joint Center for Housing Studies International Housing Conference, Bellagio Study and Conference Center, Bellagio, Italy, 9-14 May 2005.

According to reports, more households are living in their own formal houses, largely as a result of the government subsidy scheme for home-owners, but the proportion of people in informal housing has increased somewhat, largely as a result of in-migration. Furthermore, close to one in ten households live in varying formal/informal tenancy in back yards. See: National Census 1996, 2001. Available via www.StatsSa.gov.za

Access to and the provision of adequate, affordable housing is fundamental to South Africa's well being, but housing backlogs continue. Compounding the problem of availability and access is the shortage of land in areas that settlers might prefer, particularly in urban areas. In Cape Town, the housing backlog is 350,000, with allocations based on a combination of the date of application for a house, the area in which the applicant currently resides, and the location of the proposed housing development. Last November, according to city records, 153,020 applicants are awaiting housing; another 148,451 were registered with the National Department of Housing. In addition, about 70,000 people who have not registered with either the city or the national government need housing, too. See Lindsay Dentlinger, "Housing Backlog now stands at 350,000," Cape Argus, 7 November 2006.

According to Stats SA 2005 mid year population figures, Research Surveys (RS), a social and marketing insights company, estimates that of the 12.3 million households, 1.4 million are in shacks, and 1.5 million are in traditional huts. In metropolitan areas 13 percent of households are in shacks, accounting for 50 percent of shacks countrywide.  Between 1996 and 2004, the number of informal settlements increased by 30 percent and provided shelter for 5.2 million people – between 40 and 60 percent of the country's urban labor force. About 25 percent of the country's households are informal. While SA's population grew at 2.5 percent annually, growth averaged 4.4 percent in the country's eight largest cities. The population of Gauteng, the richest province in SA and the heart of its industrial and mining sectors grew by 22 percent due to inter- provincial migration. Rapidly increasing urbanization is not special to SA. Globally informal settlements are expected to double between in the next 25 years. South African Cities Network (SACN) 2004.

For millions, home ownership remains a primary, yet elusive, goal, despite the efforts of bankers and developers. Of the roughly 12 million households in South Africa, about 4 million qualify for capital subsidies, including lower income earners. About 5.5 million households earn more than R7,500 per month, but 2.5 million earn less than R1,500 a month, thus making it difficult to secure housing related loans. Adding to the problem is the withdrawal of private developers from this low end of the market; they cite the high risk of financing poor people, along with the prospect of small profit margins as disincentives. Moreover, urban land is becoming more expensive; even suburban housing markets have experienced rising prices.

Despite these affordability restrictions, more and more South Africans among lower- and middle-income earners are prospering, according to research by the Banking Association of Southern Africa, with about 625,000 households qualifying for financing. This represents an unmet demand because it exceeds availability in the affordable-housing market. In the past six years, an average of 17,000 new homes below R200,000 have been built each year. See Linda Sing, "Opening doors to affordable homes," Opinion & Analysis, Business Day, 13 October 2006.

South Africa's Standard Bank reported in early April that the median house price rose marginally in March 2007 to R580,000 from R570,000, recording 1.8% month-on-month growth. Business Day reported the bank's judgement that there had been a loss of momentum in the property market, as well as an absence of any fresh stimulus - with households now facing higher interest rates and living costs. See Nick Wilson, "Standard Sees house market flat in short term," Business Day, 4 April 2007. www.businessday.co.za/articles/topstories.aspx?ID=BD4A429507

According to policy discussion document A Nation in the Making, from 1996 to 2001, the number of households rose 30 percent while the population expanded only 11 percent. Similarly, the number of residents in the average household fell from 4.5 to 3.9, with, on average, twice as many poor people occupying a household (six people per dwelling) than more affluent people (an average of 2.9 per dwelling.) Black South Africans are much more likely to live in households of more than four people and fewer than four rooms than are white South Africans.

According to the Nation in the Making report, access to formal housing rose 42 percent for the poorest ten percent of the population from 1993 to 2004. But for a society experiencing constant migration, with flows of people drawn to cities and towns where employment opportunities beckon, urban housing density increased, in both unit terms as well as per-unit occupancy levels. According to reports, rural provinces such as Limpopo and Eastern Cape are losing people, while economic growth areas such as Gauteng and the Western Cape are gaining them. Gauteng has a disproportionate proportion of South Africa's 20- to 49-year-olds, for example, but Limpopo has a disproportionate number of 10- to 14-year-olds, probably because many working mothers send their children to schools in rural areas.

The report points to a fall in nuclear households and increases in single-person and extended households. Much of it is about young men and, increasingly, more educated and ambitious young women, migrating to urban areas where they might well have their own households. At the same time, there is a variety of extended households, often held together by social grant income. That could well be in a RDP house in a small town far from job opportunities. See A Nation in the Making: A Discussion Document on Macro-Social Trends in South Africa, Policy Co-ordination and Advisory Services (PCAS), Social Sector, The Presidency, which can be downloaded at www.info.gov.za/otherdocs/2006/socioreport.pdf

According to the government, 1.7 million houses were built or under construction between 1994 and 2005. In 2001 there were 1.9 million living in informal settlements and by 2005 that number was estimated to be 2.4 million, so the situation has gotten worse. At a Housing Indaba in late 2005, Housing Minister Lindiwe Sisulu spelled out the "stark reality": Housing competed with other equally pressing demands for funding. If current rates of funding and urbanization continued, she said, the backlogs would be the same in 2015. David Hemson and Michael O'Donovan, "Putting Numbers on the Scoreboard: presidential targets and the state of delivery," in State of the Nation: South Africa 2005-2006 (HSRC Press, November 2005).

In an attempt to stem the flow of migrants from the Eastern Cape to Cape Town, the City of Cape Town, the OR Tambo District Municipality of the Eastern Cape and the University of the Transkei signed a Memorandum of Understanding on 28 September 2004. The aim of the agreement is for the parties to share expertise to minimize migration to Cape Town. Cape Town promised the OR Tambo Municipality to help develop its infrastructure in the hope that the Eastern Cape (EC) could create the sustainable jobs that might reduce the flow of migrants from the EC to Cape Town. Cape Argus, 29 Sept 2004.

This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. Return to theThis resource is hosted by the site.