SA Budget Cuts Push Housing Sector Towards New Partnerships

Simelane warned that housing developments cannot succeed without supporting infrastructure such as water, sanitation, roads and electricity.

Human Settlements Minister Thembi Simelane has called for stronger collaboration, innovative financing models and coordinated planning to sustain housing delivery as South Africa faces growing housing demand amid significant budget constraints.

Speaking at the Tshwane Human Settlements Symposium in Centurion, Simelane said the future of housing development depends on aligning planning, infrastructure, funding, regulation and implementation around a shared vision. Her remarks come as the Department of Human Settlements prepares to operate with a reduced budget allocation of R26.97 billion for the 2026/27 financial year, nearly R7 billion less than the previous year.

Department Aims to Deliver More with Fewer Resources

The Minister acknowledged that the funding reduction will place pressure on the department's Medium-Term Development Plan targets and require a more innovative approach to housing delivery. She said rising urbanisation, increasing housing demand and infrastructure limitations mean government can no longer rely solely on traditional delivery methods.

Despite these challenges, the department has set ambitious targets for the current financial year. These include the delivery of 39,058 housing units, completion of 25,186 serviced sites, approval of 11,358 First Home Finance applications and the disbursement of 9,231 housing subsidies.

Simelane stressed that housing opportunities should be viewed more broadly than simply building houses. She said government must also focus on serviced sites, affordable home ownership, rental and social housing, mixed-use developments and the release of strategically located land for integrated settlements.

First Home Finance Programme Shows Strong Growth

The Minister highlighted the success of the First Home Finance Programme, which exceeded its target by 200% during the 2025/26 financial year. The programme assisted 8,544 households compared to an original target of 4,272. According to Simelane, the programme demonstrates how partnerships between government, financial institutions and property developers can help more South Africans enter the housing market.

She noted that demand remains particularly strong among households that fall within the so-called "gap market" — those who earn too much to qualify for fully subsidised housing but struggle to secure conventional home financing.

Infrastructure Challenges Remain a Major Obstacle

A lack of adequate infrastructure continues to be one of the biggest barriers to housing delivery, the Minister said. South Africa currently faces an estimated infrastructure financing shortfall of around R13 trillion.

Simelane warned that housing developments cannot succeed without supporting infrastructure such as water, sanitation, roads and electricity. She also highlighted progress in addressing stalled housing projects. During the 2025/26 financial year, 85 out of 212 blocked housing projects identified across the country were successfully revived, resulting in the delivery of 1,136 housing units in several provinces.

To improve delivery, the department is pursuing regulatory reforms, including the development of a new Human Settlements Act, a modernised Human Settlements Code and amendments to legislation dealing with unlawful occupation of land. These measures are intended to reduce administrative delays, improve policy certainty and unlock development-ready land.

Simelane also urged greater use of blended finance models, arguing that public funding alone will not be sufficient to meet the country's housing needs. She said attracting investment from banks, development finance institutions, pension funds and private-sector partners will be essential for future housing development. The Minister concluded by calling on government, municipalities, developers, financiers and communities to work together to create sustainable, inclusive and resilient human settlements that improve living conditions and support long-term economic growth.