Western Cape Expands Housing Market Study to Tackle Affordability Crisis

“These studies are critical to supporting strategic planning, enabling municipalities to respond more effectively to the unique dynamics of their local housing markets,” said Bredell.

 

The Western Cape Government has completed the second round of comprehensive housing market studies across seven municipalities, revealing deep-rooted challenges in access, affordability, and supply within South Africa's formal housing sector. This initiative, jointly undertaken by the Department of Environmental Affairs and Development Planning and the Department of Infrastructure, reflects a broader strategic effort to develop responsive, data-driven housing policies that are both inclusive and sustainable.

The municipalities assessed in the latest phase include Swartland, Saldanha Bay, Overstrand, Breede Valley, Bitou, Knysna, and Oudtshoorn, extending the reach of a program initially piloted in Drakenstein, Stellenbosch, George, and Mossel Bay during the first phase.

Promoting Affordable, Well-Located Housing

According to Anton Bredell, Western Cape MEC for Local Government, Environmental Affairs and Development Planning, the project aims to improve understanding of local housing dynamics and empower municipalities to develop Inclusionary Housing Policies that promote well-located and affordable housing opportunities for a broad spectrum of residents.

“These studies are critical to supporting strategic planning, enabling municipalities to respond more effectively to the unique dynamics of their local housing markets,” said Bredell.

The research has already begun to yield practical outcomes: the Stellenbosch Municipality has implemented an Inclusionary Zoning Policy in select areas, a direct outcome of the first round of analysis. The policy encourages mixed-income developments and ensures that a portion of new residential projects is dedicated to lower-income households.

Key Findings: Demand Outpaces Supply in Low to Mid-Market

The second round of studies offers nuanced insights into how housing markets function at the local level. Several systemic challenges emerged across all seven municipalities:

• Affordability constraints are severely limiting access to formal housing for lower-income households, with demand significantly outpacing supply.

• There is a critical undersupply of entry-level homes (priced below R300,000) and affordable housing units (R300,000 to R600,000), leaving many working-class families without viable options.

• Even the conventional housing segment (R600,000 to R900,000) is understocked, despite substantial demand from middle-income buyers.

• Conversely, the high-end (R900,000–R1.2 million) and luxury housing markets (above R1.2 million) are well supplied, driven by stronger developer incentives and higher profit margins.

“The imbalance in the housing market, characterised by a shortage of affordable options in the lower and middle segments and an oversupply in the upper-end market, is leading to a rise in informal housing and backyard dwellings,” Bredell stated.

Informal Sector and True Housing Need Underrepresented

A significant limitation of the current studies is their focus on the formal housing sector. Informal dwellings—such as backyard structures, informal settlements, and subsidised units lacking title deeds—are underrepresented. This means that the true scale of housing demand, particularly among the lowest-income groups, is likely far greater than the current data suggests.

This underlines the importance of expanding data collection and integrating informal housing realities into spatial and economic planning frameworks.

Evidence-Based Planning for Inclusive Solutions

Tertuis Simmers, MEC for Infrastructure, noted that the findings will allow the province to “invest smarter, plan better, and partner more effectively” with municipalities, developers, and civil society to deliver the housing solutions most urgently needed.

“The housing crisis is not just about quantity, it’s about access, location, and dignity,” said Simmers. “This data helps us respond in ways that are practical, targeted, and inclusive.”

The insights from the housing studies are expected to inform multiple policy instruments and processes, including:

• Inclusionary Housing Policies

• Affordable Housing Strategies

• Municipal Spatial Development Frameworks (SDFs)

• Integrated Development Plans (IDPs)

• Human Settlements Plans

Bredell also emphasized the importance of exploring innovative housing delivery models beyond traditional state-subsidised programs, such as public-private partnerships, inclusionary zoning, and gap market solutions that cater to households excluded from both subsidy and bond finance.

Next Steps: Comparative Report and Knowledge Exchange

The final phase of the project, scheduled for implementation during the 2025/26 financial year, will focus on updating the original studies for Drakenstein, Stellenbosch, George, and Mossel Bay. The initiative will culminate in the publication of a consolidated comparative report, which will identify provincial trends, regional differences, and outline strategic interventions to improve housing outcomes across the Western Cape.

A knowledge-sharing workshop will also be held, bringing together municipal leaders, housing practitioners, developers, and community representatives to refine strategies and foster a shared understanding of market conditions.

As the Western Cape continues to grapple with the realities of urban growth, inequality, and economic transformation, these housing market studies represent a critical tool for bridging the gap between housing policy and lived experience.