In its June 2025 Property Newsletter, data provider Lightstone revealed that only one formal house exists for every 3.3 families earning under R26,000 per month. This group represents more than 80% of South African households, underscoring the scale of the affordability crisis in the residential property market.
“There’s something very wrong if such a large demand is not being met,” says Renier Kriek, Managing Director of Sentinel Homes. “The problem is well known in the property industry, yet no real solutions are forthcoming from government actors who are responsible for solving these issues in the housing market.”
Since 2000, South Africa’s population has grown by 19.3 million, but the economy has managed to produce just 1.9 million new houses. This imbalance reflects systemic failures that go far beyond the property market itself, highlighting a significant economic problem.
Why houses remain out of reach: The housing market outlook
Rising construction costs, slow residential building approvals, and decades of stagnant wage growth have made property increasingly unaffordable. For over 70 years, house prices have outpaced wages globally, and South Africa is no exception in this global property trend.
Low economic growth further compounds the issue, leaving many low- to middle-income earners unable to close the gap between rising property prices and stagnant earnings. This has led to a decline in housing loan growth and limited access to mortgage loans for many South Africans.
What must change at a national level: Addressing the economic problem
Kriek argues that structural reforms are essential to improve the housing market outlook:
- Economic growth: “South Africa needs consistent economic policy and an end to wasteful spending. For example, paying CEOs of failing state utilities more than the UK Prime Minister is unacceptable and diverts resources away from housing,” he says.
- Structural reform: The country must embrace deregulation, labour reforms, and public-private partnerships to attract investment that builds jobs and infrastructure, ultimately benefiting the residential property market.
- Vocational training: Retiring artisans are not being replaced fast enough. South Africa needs to reindustrialise and encourage technical trades to reduce housing production costs and stimulate house price growth.
- Labour policies: Restrictive labour laws and high costs compared to peer economies make it harder to create jobs. Liberalisation could temporarily reduce wages but increase employment, helping more people afford homes and potentially qualify for mortgage loans.
“Making such changes at a national level will ensure that problems in the property market are not intractable,” Kriek adds.
Fixing the property market itself: A property market analysis
Within the housing sector, several barriers also restrict affordability:
- Bureaucratic delays: Lengthy residential building approvals drive up development costs.
- NIMBYism: Court challenges to new housing projects discourage investment in the housing market.
- Fixed charges: Municipal fees make low-cost housing unaffordable for many.
- Small unit avoidance: Developers shy away from building smaller, cheaper units due to structural disincentives, affecting the supply of affordable housing.
- Slow land release: Land earmarked for housing takes years to be made available, impacting house price growth.
- Weak lender and landlord protection: Protracted eviction and foreclosure processes disincentivise investment in affordable housing and affect mortgage interest rates.
“The government can offset these deterrents with tax breaks or programmes that release land specifically for low-cost housing,” suggests Kriek.
Opening the door to affordable homes: The future of the housing market
If 80% of South Africans cannot afford housing, the system itself is broken. The private sector has both the money and the profit motive to meet demand, but systemic obstacles prevent this from happening in the residential property market.
“The private sector is profit driven, and the demand clearly exists,” says Kriek. “It’s up to the government to create incentives and ease restrictions so resources can flow to where the demand already exists in the housing market.”
Ultimately, solving the affordable housing crisis in South Africa requires both national economic reforms and sector-specific changes. Without decisive action, millions will remain priced out of owning a home, perpetuating inequality for future generations. The housing market outlook remains challenging, but with the right interventions, there’s potential for positive change in the property market.
A comprehensive property market analysis suggests that addressing these issues could lead to more balanced house prices, improved gross rental yields, and a more accessible housing market for all South Africans. By focusing on both the economic problem and specific challenges in the residential property market, South Africa can work towards a more equitable and sustainable housing solution.
