South Africa Design and Construction Affordable Housing Opportunities

The backlog of affordable housing in South Africa, offers U.S. companies the opportunity to explore partnerships with South African firms to share their expertise in the delivery of quality affordable housing, U.S. financing, technologies, sustainable design techniques, and materials.

Despite the government having delivered 300,000 houses in the past five years, South Africa’s housing backlog remains a massive challenge for the country, with over 2.4 million households registered on the National Housing Needs Register in 2023.  High rates of urbanization place pressure on basic services and have led to increases in informal settlements. High unemployment, a weak economy, and a rising cost of living has also contributed to an increased demand for affordable housing. 

Almost half of the housing backlog is registered in Gauteng, the smallest province in size, but largest in population numbers and the economic center of the country.  Despite its massive investment in housing delivery, the South African Government is struggling to meet the housing demand, putting the onus on the private sector to deliver more affordable housing for ownership and rental.

According to the most recent General Household Survey, South Africa has a population of approximately 61.4 million people, living in 18.5 million households. The urbanization rate was 1.56% in 2022.  Urbanization in South Africa is high – over two-thirds of South Africans already live in urban areas, with this expected to rise to 71% by 2030. 

In 2022, 83.2% of South African households lived in formal dwellings, 12.3% lived in informal dwellings and 4.3% lived in traditional dwellings. Within metropolitan areas, however, almost 16% of households lived in informal dwellings, many in backyard dwellings or informal settlements. South Africa has approximately 3,400 informal settlements nationwide. The National Department of Human Settlements (NDHS has a program focused on upgrading these, which saw 1,168 informal settlements upgraded in the 2021/22 financial year.

2023 has brought increased attention in the sector on small-scale affordable rental, the provision of serviced sites, and support to micro developers in township areas. Recent years have also seen an increased focus on the provision of social housing, through leveraging private sector investment. Inclusionary housing policies at provincial and local levels of government (including most metropolitan municipalities) intend to ensure the provision of affordable housing in larger housing developments.

Other opportunities exist around housing finance. Alternative funding models that allow for phased loan repayment could be appropriate given the need for alternative tenures to be part of the financing considerations for housing finance. Alternative models include the rent-to-own model and the installment sale agreement mode. 

To improve the delivery and quality of affordable housing, U.S. financing, technologies, sustainable design techniques and materials are sought after in South Africa.

Jaisvir Sewpaul
U.S. Commercial Service, South Africa
Jaisvir.Sewpaul@trade.gov