South Africa’s banking system is the largest in Africa, with the country’s top four financial institutions ranking among the top 10 on the continent. These are Standard Bank Group, FirstRand Ltd, Absa Group and Nedbank Group. They provide over 80% of banking services in the country11 and are also the largest residential mortgage lenders amongst the more than 15 mortgage providers operating in the country.¹²

While the banking industry in South Africa has been highly concentrated in the past, the Financial Sector Conduct Authority (FCSA) notes that this is changing, given increasing competition from newly established banks, technology-enabled start-ups and an increasing number of retailers offering financial services. New entrants to the banking sector includeTyme Bank in 2018, Discovery Bank in 2019 and Bank Zero in 2021. Each of these are primarily digitally driven, with limited physical infrastructure, a reflection of global trends in the delivery of banking services.¹³

More than 91% of South African adults have access to formal financial products and services, with approximately 3.6 million adults still excluded. Approximately 81% of South African adults use a bank account, while 78% use other formal nonbank financial products. However, low income earners do not engage meaningfully with the financial sector and small, medium and micro enterprises (SMMEs) are marginally served. The high level of financial inclusion has not seen a concomitant improvement in the quality of life of low income South Africans and SMMEs.¹⁴

By March 2024, the total outstanding gross debtors’ book of consumer credit was R237 billion (US$13.1 billion), with mortgages making up 52%. However, the National Credit Regulator (NCR) notes a significant decrease in the value of mortgages granted by 15.42% quarter on quarter. Over 98% of mortgages were granted to individuals earning above R15 000 (US$830) monthly. In Q1 2024, 1.67 million residential mortgages were outstanding.¹⁵

Despite high levels of financial inclusion overall, women are disproportionately financially excluded. In 2018, 47% of women were financially excluded compared to 39% of men. This was far worse for women living in rural areas.¹⁶ Various finance products are offered for low income earners, from a range of institutions. More than 2 000 microfinance providers operate in the country, with the value of microfinance loans estimated at R27 billion (US$1.47 billion) in 2019.¹⁷ However, only two institutions having achieved scale through servicing over 2 000 clients. Direct support and strengthening the capabilities of these institutions are among the priorities identified in the Inclusive Financial Sector Policy adopted in November 2023.¹⁸

Unemployment continues at an alarming rate in South Africa – 32.9% in Q1 2024. 19 As noted above, the Gini coefficient measured 0.67 in 2023, the highest level of inequality in the world.²⁰ Because of the levels of poverty and inequality, social grants provide a vital safety net, evidenced in the sharp increase in the percentage of households receiving grants – which are the second most important source of income for households after salaries, and the main source of income for 23% of households nationally.²¹

In its 2023 Annual Report, the Housing Development Agency (HDA) notes that, “90% of the population cannot afford housing costing more than R190 000 (US$10 512),” and, of those South Africans who can afford finance, the bulk (17%) can afford housing of approximately R100 000 (US$5 532) and R189 000 (US$10 456).

Households earning R2 500 (US$138) a month, eligible for a housing subsidy and able to afford approximately R50 000 (US$2 766) of credit, could presumably afford a house costing approximately R93 000 (US$5 145) – presuming they can access finance and a house at this price. With a repayment amount of 25% of income, a household earning R7 500 (US$415) a month could afford approximately R170 000 (US$9 405) in credit, which together with a deposit would enable the purchase of a house costing approximately R189 000 (US$10 456).

The national housing programme in South Africa offers subsidy support for a number of types of housing, including ownership and rental (social) housing. In 2022, income bands for social housing were revised upward to a gross monthly income of R1 850 – R22 000 (US$102 – US$1 200).²² The First Home Finance programme, which provides a subsidy to low income homeowners, saw almost 6 000 households receive financial assistance in the 2022/23 financial year. This subsidy aims to help low to middle income households to buy or build a house. It is specifically aimed at “the gap market” i.e. those who do not qualify for a fully subsidised house but also cannot access a mortgage loan from the banks without assistance. Just over 19 000 beneficiaries have been assisted in the 2019 to 2024 term of office.²³

National housing delivery programmes also include the Integrated Residential Development Programme (IRDP), Informal Settlements Upgrading Programme and the Affordable Rental Housing Programme. South Africa has almost 4 300 informal settlements.²⁴ The DHS’ Informal Settlement Upgrading Programme is focuses on in-situ upgrading of informal settlements to ensure tenure security, health and security, and provide community empowerment. In the current term of office (2019 to 2024), the DHS aims to upgrade 180 000 stands to have access to municipal services. By mid-2023, a total of 1 269 informal settlements were at various stages of upgrading.²⁵

Providing social rental housing is a key focus area for government and is highly regulated. Projects must be in restructuring zones, which are identified by local municipalities and supported by provincial government and the Housing Development Agency (HDA); there must be cross-subsidisation and socioeconomic integration within projects; and while projects must cater for low income households, they also need to achieve an income mix.²⁶ The Social Housing Regulatory Authority (SHRA) in its most recent Annual Report states that a total of 44 114 rental units are under regulation across the country, with over half of these located in Gauteng province. A further 30 000 units received approval for capital funding in the 2023/24 financial year.²⁷

In order to improve available data on the rental market, in 2024 a Social Housing Portal was developed as a collaborative effort by various organisations in the public, private and civil society sectors. The portal maps accredited social housing projects, in recognition of the significant potential of social housing to reduce the country’s housing crisis, promote spatial integration and stimulate inclusive economic development.

Construction activity, especially of residential buildings, appears to have slowed considerably. Statistics South Africa report that in May 2024, R18 billion (US$1 billion) worth of residential building plans had been passed by municipalities, compared to R22 billion (US$1.2 billion) in the same period in 2023. This represents a 10% decrease in building plans passed.²⁸ The National Home Builders Registration Council (NHBRC) is the regulatory body of the home building industry ensuring that builders comply with the prescribed building industry standards.

Apart from the conventional housing market, homeowners and micro-developers are key players investing in better quality brick-and-mortar flats for rent. As noted at the 2023 National Housing Symposium on Small-Scale Affordable Rental Housing, this sector is increasingly recognised as “the largest deliverer of accommodation by the metros” and provides significant benefits in urban densification, income generation and development of stronger local economies.²⁹

According to the 2022 Census, just over 41% of dwellings were owned and fully paid off, a similar figure to the two previous censuses. Rented dwellings decreased slightly between 2011 and 2022, from 25% to 23.3%. Less than 7% of households live in dwellings that are owned but not fully paid off, a decrease from 11.8% in 2011.³⁰ The percentage of households that have received some form of government housing subsidy increased from 5.6% in 2002 to 12.0% in 2023. A higher percentage of female-headed households (14.4%) than male-headed household (10.1%) received subsidies.³¹

As of December 2023, South Africa’s residential property market is made up of 6.91 million properties valued at R6.8 trillion (US$375 billion). Two-thirds of these properties are valued at R900 000 (US$49 792) or less, largely as a result of the massive public investment in housing since 1994. As can be expected, given that 40% of the country’s population live in the eight metropolitan municipalities, 57% of residential properties in South Africa are in these cities.³²

Issuing title deeds has been a complex issue for government. In the 2022/23 financial year, the DHS had planned to deliver almost 400 000 title deeds but achieved delivery of just over 25 000. This massive shortfall is attributed to several factors, including outstanding township establishment plans, family disputes, deceased estates and informal transactions. In the 2023 State of the Nation address, the title deed backlog was put at over one million houses amounting to an estimated R244 billion (US$13 billion).³³

The national Deeds Office is an entity of the Department of Agriculture, Land Reform and Rural Development and is mandated to register title deeds and documents, manage and maintain the country’s land register, provide information related to registration and archive the records. There are 11 deeds registries located in nine provinces overseen by the Office of the Chief Registrar of Deeds.

Delayed property transfers, Deeds Office backlogs and service disruptions remain issues undermining formal transactions. Typically, transfer of a property in South Africa takes three to six months. Steps include new bond application and approval, cancellation of existing bond, municipal clearance, payment of transfer duty to the South African Revenue Service (SARS), and finally, lodging documents at the Deeds Office.³⁴

In 2021, Stats SA started working on the development of a Residential Property Price Index (RPPI) in partnership with the South African Reserve Bank (SARB) and the International Monetary Fund (IMF). The RPPI aims to measure the changes in the price of residential properties such as houses, townhouses and flats bought by households. In December 2023, according to the RPPI, annual national residential property price inflation was 1.6% in December 2023, unchanged from 1.6% in November 2023. The main contributor to this was the Western Cape, which increased by 4.7% year-on-year.³⁵

The primary legislation governing housing in South Africa is the Housing Act 107 of 1997, with the Constitution stating that everyone has the right to access to housing. Numerous other pieces of legislation and policy have also been developed – the Draft White Paper on Human Settlements (2023) notes three waves of policy development since the advent of democracy. This has seen national policy moving from building houses for integration in the first wave, from 1992 to 2003, to a focus on the state as a housing facilitator, ensuring greater access to a wide variety of housing options by the third wave from 2012 onwards. This third wave, premised on the country’s 2030 National Development Plan, has seen policies and frameworks implemented including the Integrated Urban Development Framework (2014) and the Spatial and Land Use Management Act (2013). 36 The draft White Paper met resistance from civil society organisations and its approval was pushed into 2024, to allow for further work on it.^{37, 38}

Other policy development and legislative initiatives include introduction of: the Consumer and Borrower Education Policy aimed at increasing access to housing finance; the employer-assisted housing policy, intended to increase employees’ access to affordable housing through a structured partnership approach; and the Norms and Standards for Affordable Housing Policy. Two policy programmes implemented by the DHS in the 2022/23 financial year include the Upgrading of Informal Settlements and the Rent-to-Buy Policy Programmes.³⁹

Priorities at a national government level are: upgrading informal settlements; eradicating mud houses; increasing supply of affordable housing and rental stock; acquiring and releasing well-located land; implementing catalytic human settlement projects; and the effective delivery of title deeds to ensure security of tenure. Given decreasing budget allocations, the DHS notes that it will need to increase public-private partnerships and improve capacity at a local government level. New regulations for the First Home Finance Programme have broadened the scope to include more financing institutions, and the DHS is concluding service level agreements with various financial institutions.⁴⁰

Social housing and the provision of affordable rental housing is receiving increased attention as partnerships with private sector institutions are explored. The SHRA is focused on fast-tracking delivery through the facilitation of partnerships and funding for social housing development with the private sector. This is good news for property finance companies such as TUHF21 who specialise in financing property development projects in inner cities.⁴¹ Unlocking affordable finance options for micro-developers of small-scale rental housing also present unique opportunities to reach scale.

Finally, the development of a Human Settlements Development Bank (HSDB) intends to deliver on developmental outputs covering elements such as bridging finance to developers and construction companies in the affordable home ownership and subsidy housing markets. A policy framework for this Bank has been approved and once reworked based on comments from National Treasury, the HSDB Bill will be promulgated, and National Treasury will consider the capitalisation of the entity.⁴²

Statistics South Africa publishes statistics on population figures, households, building figures etc. and a monthly RPPI. Housing finance data is available from the NCR, the National Housing Finance Corporation (NHFC), DHS and the SARB. The NCR publishes the Consumer Credit Market Report quarterly which details mortgage information, credit transactions and developmental credit.

The DHS produces annual reports and performance plans which provide information on government spending on human settlements, planning and targets for delivery, subsidy programmes and affordable housing. Disaggregation of data by gender is generally limited. On climate issues, the DHS publishes narrative reports on its approach to disaster management and climate change. The newly launched Social Housing Portal includes maps, data and dashboards intended to provide an open-access data and information platform focusing on social housing delivered by government.

Private sector data providers include companies such as Lightstone Property which provides a residential property toolkit for its subscribers, Knight Frank and First National Bank.

The Contractor and Developer Academy (CDA), established by the Development Action Group (DAG) in 2017, is a social enterprise development programme intended to capacitate and provide sociotechnical support to small-scale developers and emerging contractors. The focus is on micro-developers – entrepreneurs and homeowners supplying formal affordable rental housing.

A recent development in Delft’s Main Road, Cape Town, highlights the significant benefits of this programme. The micro-developer, a full-time public sector employee, used a combination of personal savings, personal loans and short-term finance such as credit cards and overdrafts, to develop his first five-unit block in 2015.

By 2019, his third development was financed through a loan secured from iBuild, a flexible lender providing loans in the affordable housing space. He used the support of DAG to access finance, ensure regulatory compliance and the design of the units. He is already planning his next project, highlighting the potential of entrepreneurial micro-developers to use a handful of units to grow a bigger property portfolio.

DAG’s CDA has trained a total of 118 developers and contractors and reached over 400 through its information sessions. Benefits include better understanding of the market by micro-developers, and improved income while good quality housing contributes to sustainable neighbourhood densification.

For more information, visit: Contractor and Developer Academy https://contractordeveloperacademy.org.za/who-we-are/

Empower Shack provides alternative affordable housing units for informal settlement dwellers. These double-storey homes range from 42.5 to 80 square metres and were designed and built by the Khayelitsha-based non-profit organisation, Ikhayalami, in collaboration with design studio Urban Think Tank (UTT) based at the Swiss Institute of Technology in Zurich.

The project aims to upgrade informal settlements through four components: a two-storey housing prototype, a participatory spatial planning process, integrated urban systems and economic solutions. Livelihood programmes include construction and upgrade facilitation apprenticeships, and community urban management. The intention of the two-storey model is to create more space for people live and work from their homes. It allows for fire break spaces to give emergency services easy access. Houses are arranged around a sanitation core providing water and toilets, and additional levels can be added if needed.

To date, 73 new homes have been built on land in Site C, Khayelitsha. Houses are built from brick, wood, and zinc sheets, and are fireproof and water-resistant. Five different model sizes were available for families to choose from, with each house fitted with a water management device and prepaid electricity meter.

Swiss Re, a reinsurance firm based in Switzerland provides 90% of the funding. The remaining 10% is financed by the families, primarily through microfinance loans. Monthly instalments range from R300 to R1 300 (US$16 to US$69). The total cost to build homes ranged from R230 000 (US$12206) for the smallest model to R480 000 (US$25474) for the largest model.

First National Bank: www.fnb.co.za
Housing Development Agency: www.thehda.co.za
National Credit Regulator: www.ncr.org.za
National Department of Human Settlements: www.dhs.gov.za
National Home Builders Registration Council: https://www.nhbrc.org.za/
National Housing Finance Corporation: www.nhfc.co.za
National Association of Social Housing Organisations: https://www.nasho.org.za/
Social Housing Portal: https://www.socialhousingportal.org.za/
Social Housing Regulatory Authority: www.shra.org.za
South African Reserve Bank: www.resbank.co.za
Statistics South Africa: www.statssa.gov.za
TUHF: www.tuhf.co.za

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2. World Bank (2023).World Development Indicators.
3. Statistics South Africa (2023). Census 2022 Statistical Release P0301.4. Pg. 67.
4. Ibid. Pgs. 72-76.
5. World Bank (2024). Urban population (% of total population) – South Africa.
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   https://pmg.org.za/question_replies/?filter%5Bminister%5D=40 (Accessed 28 July 2024)
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14. National Treasury (2023).An Inclusive Financial Sector for All. Pg. 1.
15. National Credit Regulator (2024). Consumer Credit Market Report: March 2024.
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17. Birguid (2019). South African Micro Finance Executive Summary. https://shorturl.at/u5XJ2 (Accessed 3 August 2024). Pg. 4.
18. See footnote 14.
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20. Valodia, I. (2023). South Africa can’t crack the inequality curse. Why, and what can be done. 15 September 2023. University of Witwatersrand.
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23. Department of Human Settlements (2023).Annual Report 2022/23. Pg. 12.
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26. Social Housing Portal. https://www.socialhousingportal.org.za/social-housing
27. Social Housing Regulatory Authority (2023). 2022/23 Annual Report. Pgs. 22-23.
28. Statistics South Africa (2024). Selected building statistics of the private sector as reported by local government institutions (Preliminary). Statistical release: P5041.1. Pg. 3.
29. CSP (2023). National Housing Symposium on Small Scale Affordable Rental Housing. https://shorturl.at/bWAKJ (Accessed 19 August 2024).
30. See footnote 3. Pg. 71.
31. Statistics South Africa (2023). General Household Survey: 2023. Statistical release: P0318. Pgs. 27-28.
32. CAHF (2024). South Africa Housing Market Report. https://shorturl.at/czJqZ (Accessed 17 September 2024). Pgs. 1-2.
33. Ramaphosa, C. (9 February 2023). State of the Nation address. Pg. 15.
34. Lamna. How Long Does a Property Transfer Take in South Africa, 2024? 3 January 2024.
35. Statistics South Africa (2024). Residential Property Price Index. https://www.statssa.gov.za/publications/D0160/D0160December2023.pdf (Accessed 30 July 2024). Pg. 3.
36. Department of Human Settlements (2023).White Paper for Human Settlements. Government Gazette No 49895.Vol 702, 2023. Pg. 14.
37. Budlender, N. and Ludidi, F. (2024). Human settlements policy review requires great care and collaboration. 14 March 2024. Business Day.
38. Project Preparation Trust (2024). Feedback on draft White Paper for Human Settlements provided by Project PreparationTrust (PPT). 26 February 2024.
39. See footnote 23.
40. Department of Human Settlements (2023).Annual Report 2022/23. Pg. 90.
41. TUHF (2024).Welcome to TUHF. https://www.tuhf.co.za/products-and-services/ (Accessed 19 August 2024)
42. National Housing Finance Corporation (2023). Integrated Annual Report 2022/23. Pg. 9.