SA's 2.6-million housing backlog stalled by high land costs, budget cuts

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29-09-2026
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Cape Times
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Human Settlements Minister Thembi Simelane has cited limited availability and high cost of well-located land, fiscal constraints and declining value of grant funding as some of the reasons the government was struggling to provide alternative housing models like social and affordable rental housing.

Simelane revealed in March that the national housing backlog stood at about 2.6 million units affecting more than 12 million people.

She said suitable land close to employment opportunities, transport networks and social amenities was scarce and costly and the release and development of strategically located land was often delayed by land ownership issues, planning approvals, rezoning processes and infrastructure requirements.

She was replying to a parliamentary question from MKP MP Shunmugam Ramsamy Moodley who wanted to know why Simelane’s department had not significantly accelerated and expanded alternative housing-delivery models such as social housing, affordable rental accommodation and the provision of serviced sites, alongside fully subsidised housing, particularly in well-located urban areas where the demand for affordable accommodation was greatest.

Simelane also attributed the lessening delivery to fiscal constraints and declining value of grant funding.

“The expansion of social housing, affordable rental accommodation, serviced land, and finance-linked housing requires substantial capital investment. At the same time, the department must continue assisting vulnerable households that qualify for fully subsidised housing.”

Simelane said the department has identified budget reductions, insufficient funding, rising construction costs, inflation and weak economic growth as material constraints affecting delivery at scale.

“The annual grant transfers have been decreasing, affecting allocations to implementing agencies and the funding of services and bulk-linked infrastructure,” she added.

Simelane said another hurdle to alternative housing delivery was limited bulk infrastructure.

“The development of well-located land depends on additional water, sanitation, electricity, roads and transport capacity. In a number of municipalities, existing bulk infrastructure has reached or is approaching capacity.

“The cost of bulk infrastructure is not always fully accommodated in the housing project budget, while municipalities may have constrained capital budgets and weak revenue bases. This delays both public housing projects and private investment in affordable housing.”

Simelane explained that alternative delivery models generally involve several institutions, including provinces, municipalities, human settlements entities, social housing institutions, lenders and private developers.

She said as projects pass through land, planning, environmental, procurement, funding, regulatory and municipal approval processes, delays in rezoning, township establishment, building-plan approval, land release and infrastructure agreements affect project readiness and can make projects financially unviable.

The department, she said, has also identified fragmented planning, underprepared project pipelines, regulatory delays, procurement inefficiencies and skills constraints as systemic impediments to human settlements delivery.

Simelane said social and affordable rental projects have to remain affordable to tenants while also generating sufficient income for operating costs, maintenance, debt servicing and long-term asset management.

“High land, construction, infrastructure, security and municipal service costs can make developments unviable at the rentals affordable to lower-income households,” she said.

“There are constraints relating to the institutional and financial delivery of rental stock, maintenance of public rental stock, high rentals, inadequate rules governing certain private-sector participants and insufficient cooperation in releasing state land and buildings.”

Simelane’s written reply also shows that the government delivered 183 788 fully subsidised housing units in the five financial years between 2021/22 and 2025/26.

A mere 2 199 hostel units and 72 institutional units during the same period, 159 033 serviced sites and 14 128 social housing units from 2021/22 to the end of June this year.

The government supported 11 170 families through its First Home Finance programme which is intended at assisting qualifying households who earn too much to qualify for a fully subsidised house but may not be able to access an adequate mortgage without subsidy assistance.