African liveability Housing

Affordable housing in the central city: frequently asked questions

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To thrive, cities need people and people need safe and affordable places to live. It is this relationship that lies at the heart of the need for affordable housing in the central city of Cape Town.

On 24 August, the Cape Town Partnership participated in an Open City workshop as part of the Open Design Festival, and spoke about the need for more affordable housing options in the central city. Affordable housing is an essential component of realising the vision of Cape Town as an economically thriving, socially cohesive city, brimming with colour and diversity, home to a true cross-section of South African society.

In short, affordable housing means better access to all the amenities, infrastructure and economic opportunities of the city. It means that children have access to parks and schools and safe means to travel to both. It means the parents of those children have access to hospitals and job opportunities and public transport. It means less time spent commuting to and from work which in turn means more time spent with family and friends.

More integrated housing also means less rush-hour traffic congestion, more customers for local businesses and livelier, more liveable neighbourhoods. Lastly, adequate affordable housing close to urban nodes can also break down the socio-economic inequalities of the past while encouraging higher urban densities and easing the detrimental environmental effects of low-density urban sprawl.

Done right, affordable housing means a happier, healthier city for all.

Here we address some of the most frequently asked questions around the topic of affordable housing in the local context.

  1. What is social housing?
  2. Why does Cape Town need housing in its central city?
  3. What type of housing is needed?
  4. Why do Capetonians need (affordable) housing in the central city?
  5. Who needs affordable housing in the central city?
  6. Isn’t it better to make a profit on land in the centre, and subsidise on the periphery?
  7. Isn’t land in the central city just too expensive?
  8. What is a social housing institution (SHI)?
  9. What about GAP, RDP or BNG houses?
  10. Surely it is better to own than rent?
  11. Surely poor people want a house with a garden on all four sides?
  12. But walk-ups don’t sell in the townships. Doesn’t this prove that poor people want a house with a garden?
  13. Isn’t integration unrealistic? After all, inequality exists around the world
  14. What is the Cape Town Partnership doing about affordable housing?

What is social housing?

Social housing is rental housing that is targeted at individuals and families that earn above the ceiling limits of direct government housing subsidies, yet earn below the required income level to qualify for traditional mortgages and other financial instruments. The Social Housing Regulatory Authority of South Africa defines it as “a rental or co-operative housing option which requires institutionalised management which is provided by accredited SHIs (social housing institutes) or in accredited social housing projects in designated restructuring zones.”

Social housing as a category does not include informal settlements or houses in the Reconstruction and Development Programme (RDP).

Why does Cape Town need housing in its central city?

Cities across the world are recognising the economic, environmental and social benefits of compact urban development that clusters and concentrates multiple uses in densified nodes of vibrant activity. There are many well-established arguments in support of densification and integration. These include resource efficiency, improved functionality of transport systems (more people moving shorter distances) and, if done right, concentrations of activity that result in more economically and socially vibrant cities.

To realise these and other benefits, appropriate densification is not just about filling an area with more buildings. According to the MISTRA (the Mapungubwe Institute for Strategic Reflection) project on sustainable development, “a city should be dense in terms of all the qualities and functions they can offer and that makes us want to live in cities. Qualities such as houses, stores, work places, recreation spaces, meeting places and parks.”

In Cape Town, the case for densification is wrapped up in heritage, history, memory, and functionality. While the city’s early development saw the growth of a dynamic and thriving residential footprint alongside the port, colonial segregation and apartheid-era forced removals (like those of District Six) resulted in an unequal and under-densified residential footprint in Cape Town’s central city. As the 20th century came to a close, people continued to leave the central city for areas in the suburbs, putting pressure on our transportation infrastructure and scattering what used to be a thriving and cosmopolitan central city population.

While the past ten years have seen more people moving into the central city, large parts of the area still operate on a “9 to 5” shift. We see large numbers of people leaving town at the end of the work day, resulting in a far less vibrant night life and weekend life than was once possible. We also face some quite serious challenges for the future of the city: If we keep promoting the current pattern of sprawled urbanism, the patterns of segregated spaces, unequal opportunities, and environmentally destructive expansion will only continue to increase. We can start to mitigate this by encouraging a more sustainable equilibrium between the supply of commercial and residential opportunities in the central city.

What type of housing is needed?

When Cape Town Partnership talks about housing in the central city, we are talking about a range of housing options. A vibrant, inclusive, economically sustainable central city space should offer a range of housing options – different tenure options, different sizes and different affordability levels.

A good way to think about housing is through the lifecycle of an entrepreneur. As a student, a future entrepreneur needs to be able to access affordable and well-located student accommodation by her university. After graduating, she needs to be able to live in a rented flat close to her studio or store, which needs to be close to customer markets – the central city is the best place for all three. As her business grows, she should be able to access housing opportunities that allow her to expand her business, her family, and her asset base: Here, the transition from a rented flat into an owned home could be a vital step in all three growth areas. As her family grows, her central city location allows her children to access great schools and her business to flourish, all while reducing the impact she has on the environment through less driving, greater social interaction, and stronger economic participation.

Why do Capetonians need (affordable) housing in the central city?

We are all aware of the backlog in housing supply in cities across the world, with Cape Town being no exception.Some people say that they are tired of the “tale of two cities” – the many references to the spatial segregation that dominates Cape Town’s urban footprint. This, however, is our spatial reality. It was not created through market forces alone, but through the social engineering of the apartheid system.

When looking at the need for affordable housing, it is important to first recognise that ‘affordability’ is a relative term. Affordability is relative to income, as well as relative to market availability. Currently, affordability to a middle-income person looking to live in town might be limited to a small apartment. Affordability to a lower-income person looking to live in town might be limited to sharing a small apartment with a few others. Affordability to a lower-income person in an outlying area might initially mean a small free-standing house, but once transport costs have been factored in, they may be forced into an informal or shared living set-up on the urban periphery.

And it is with this last point that we start to understand why Capetonians need more affordable housing in the central city. The costs of living far from places of economic opportunity are significant. Quantec data on household income and expenditure for 2011 shows that the average Cape Town household spends 14% of their income on housing, and 17% on transport (with ranges up to 20% on housing and 24% on transport depending on the spatial sub-place). The further you live from your area of work, the more you pay in transportation costs. This means that the poor end up paying disproportionately more in transportation costs each month, eating into the household income that could otherwise go towards asset investment, savings, or education opportunities.

Apart from effects on household income, unequal housing options also come with social costs, like the impact on early childhood development when both parents have to commute close to two hours every day. Often, learners have to travel alone into the central city because their parents do not have the time or resources to accompany them to school, especially when work is in a different direction.

Who needs affordable housing in the central city?

When we talk about mixed income living, many people become afraid. They fear crime or slums, a drop in property values or the loss of values, culture, memory or heritage. But when we as South Africans, talk about introducing accommodation for lower-income earners into middle- and upper-income areas like the central city, we are not talking about some nameless, frightful, inherently different other. We are talking about Susan, the caring, wise and generous woman who helps to raise your children. We are talking about Lionel, who after successfully helping to construct a house in Green Point is living on the premises in charge of maintenance – only part time at best, so he contributes to street beautification projects, now well known by all the neighbours. Lionel, who earns R2500 per month and whose housing security is linked entirely to the whim of his employer. We are talking about the Sister who cared so patiently and gently for your father in his last months. The Sister who is coloured and has children of her own who she wants to get home to at a decent hour. We are talking about the young design student who, full of hope and passion for the long future ahead of him, is seeking a place close to campus so that he can work part time, study full time and, instead of traveling the rest of time, have a little bit of youthful fun.

Isn’t it better to make a profit on land in the centre and subsidise on the periphery?

Arguments against mixed-income densification are generally based on the idea that central city land is expensive, therefore subsidising housing on it is wasteful. Expensive land should rather be sold at maximum price value (so the argument goes) and used to subsidise more houses on their periphery where land is cheaper.

Many people also believe that the way to solve housing backlogs is through sweating high-value central city property assets and using the funds to cross-subsidise housing investment elsewhere. This model is inherently unsustainable: As we continue to push the boundaries of our urban area, increased sprawl demands a much higher investment in services and infrastructure in areas where economies of scale are particularly low. New housing developments in far-flung areas require greater inputs of sewerage, electricity, transportation, and built-environment assets (like shops) that all cost the taxpayer excessive amounts of money.

Perhaps more importantly, reserving central city land assets and pushing housing to the periphery disconnects housing from a far more complex mix of city design interventions that are needed to create an economically, socially and environmentally sustainable city. This separation entrenches spatial segregation of classes, which in Cape Town still all too often means segregation of races.

If we are looking towards our urban future and becoming a truly sustainable, functional city, all forms of land use are needed in active nodes across the metro. More housing options for different income scales help to create more economic opportunity for more people, resulting in a stronger, more resilient, and more inclusive socio-economic reality.

Isn’t land in the central city just too expensive?

Just 200m from Waterloo station in London, there is a tall, glass-clad modern building that includes 25% social housing units. In the Netherlands, over 30% of all housing stock is social housing, across spatial and market areas. In Canada, there’s a similar trend – one of Toronto’s largest urban regeneration projects is a mixture of housing types, tenures, income groups and mixed retail, commercial and educational offerings.

Affordable housing in urban centres isn’t impossible: It just requires a different approach to evaluating the viability of any property development.

The matrix below shows some of the factors that influence the viability of property development schemes in South Africa, with the price of land just being one factor among many.

Teams are often structured to work through these factors sequentially, essentially “fixing each problem” or variable as it arises. Teams that work concurrently and collaboratively, with an understanding of the relationships between the various factors, are better able to deliver a project that meets multiple objectives or fixed requirements. 



Because control or influence sits across public, private and civic institutions, balancing these variables to ensure inclusive, multi-use, multi-income development requires partnerships between government, private commercial developers and social housing institutions.

Partnership-based housing models work with the following common ingredients:

  • A government that values land not on highest prices, but highest return as a measure of social value (such as meeting the need for housing, quality public spaces and multi-use environments) and economic value (including cost savings associated with avoiding sprawl and indirect economic gain resulting from economies of scale)
  • A government that enables private developers to work through streamlined and democratic systems that reduce land-holding and planning costs and apply flexible requirements relating to bulk and parking
  • Planning systems that enable proactive and transparent collaboration and negotiation that ensure the right balance between land use, bulk and target market is struck and that the outcome works for all parties, including shareholders of the commercial partner
  • A government that insists on developments being inclusive – applying standard ratios for inclusion of social housing, especially on land that is government-owned
  • Private developers willing to work with these systems, negotiate with planning authorities and partner with social housing institutions to combine debt, equity, commercial and non-commercial rates to create a viable development.
  • Social housing institutions (SHIs) that add value through long-term community and economic development programmes focused on building skills, community and cohesion. In fact:
    • Established SHIs that have fully paid-off developments elsewhere are able to inject some equity into the mix
    • Through the Social Housing Regulatory Authority (SHRA), a subsidy of approximately R125 000 per unit can be accessed
    • Through debt financing that is funded on a relatively long-term debt service cover ratio (DSCR) agreement, the remainder is made up. The SHI is able to attract this loan as they can guarantee:
      • Rentals within the social housing rental band in perpetuity (i.e. the generation of cash flows to repay the debt)
      • They have ownership or a long-term lease on the building, as a last surety against the debt

As partners in shaping our future city, we need to come together and pilot housing models that follow these principles. Case studies from abroad show us that centrally located mixed-income housing does not produce degeneration – if it is designed, maintained and programmed properly. Local, less-centralised housing initiatives show us that the belief that poor people don’t want apartment living is simply untrue. We need to take the first step towards proving that centrally located mixed-income housing can be done, to the benefit of both residents and community members. We need to come together as partners and commit to an authentically inclusive, vibrant and sustainable city.

What is a social housing institution (SHI)?

Social housing institutions exist around the world. They are companies that have been set up to deliver and manage social housing. They are more than property developers. They manage a multitude of community programmes that ensure that their housing developments are socially sustainable in the long-term.

SHIs help to ensure that the affordable stock remains affordable, in perpetuity. This is an important point – the rental model used by SHIs ensures that social impact is not short-lived through fast re-selling of subsidised units at broader market prices. SHIs are able to fund their portion of the development through a combination of cross-subsidisation by commercial and market/bonded units, government subsidies (already in place nationally in South Africa), equity (South Africa has well established social housing institutions with large asset portfolios) and debt (financed on using rental cash flow in debt servicing cover ratios).

In South Africa, SHIs are governed under the Social Housing Act (1998) and supported by the Social Housing Regularity Authority (SHRA).

The National Association of Social Housing Organisations (NASHO) is a membership-based federation of 17 well-established social housing institutions in South Africa. NASHO represents the interests of its members by being the voice of South Africa’s social housing sector – providing information, advocacy, capacity building and other areas of support.

The City of Cape Town has also signed agreements with SHIs, indicating an intention for SHI-municipal cooperation. This covers mechanisms for dealing with ongoing costs, such as utilities costs, as well as collaborating on specific projects on City-owned land.

What about GAP, RDP or BNG houses?

Housing interventions come in many different forms, tied to many different government programmes designed to increase opportunities for home ownership and access to shelter.  Here is a very quick snapshot of two of the most common ones that you may have heard about (although this list is by no means exhaustive):

  • “Gap Market” Housing: This type of housing generally refers to people who earn roughly between R7500 and R15,000 per month, although specific definitions vary between organisations.  The challenge that comes from this market is that, while most people in this category have reliable salaried jobs and steady income (here, think government employees, nurses, salespeople, and young professionals), traditional mortgages and financial instruments don’t cater for their level of collective earning.  Thus, people fall into a “gap” where they earn well beyond a subsidy-qualifying salary, yet still cannot gain access to a traditional bond.  Housing initiatives in this category generally involve strong partnerships between banks, developers, and municipalities to promote strategic new financial instruments combined with new cost-saving designs in well-located sites.
  • RDP/BNG Housing: This is generally the most recognisable form of government-subsidised housing available, and was pioneered under Nelson Mandela’s Reconstruction and Development Programme (RDP).  Generally, RDP houses are single-family homes for people that earn between R0 and R3,500, paid for by the government.  Their main goal is to address the massive housing shortage in the country, and they have historically been constructed on larger plots of land in the outer areas of cities.  Breaking New Ground, or BNG housing, represents a more updated version of this model.

While these forms of housing all play a role in a comprehensive housing solution, they come with their own sets of challenges, particularly when looking to provide affordable housing options closer to the economic centre of a city. The funding of these ownership tenure models means that the cost of land is a critical component of financial viability.

In terms of appropriate models for central city environments, the need for higher density and higher prices generally rule out the construction of RDP housing.  Housing in the “Gap” market can be addressed through specific market interventions closely aligned with financial institution targets.  Social housing can be promoted in the central city through strong partnerships between government departments, developers, and communities, so that housing is constructed in a way that supports greater community growth, economic connections, and social benefit.

The social housing financing model is also affected by the cost of land, but due to long-term debt servicing through rentals, this is a less critical factor. Looking across the country, examples of well-located social housing in inner-city Johannesburg demonstrate how social rental housing can integrate with higher-value housing and commercial activities to bring people closer to opportunities for economic and social growth.

Surely it is better to own than rent?

Home ownership has long been associated with increased family wealth. This can be attributed to a number of factors, but is largely due to a generalised long-term trend that, as the value of property increases, so the home owner is able to leverage capital through mortgages against the asset, which can then be used to start a small business, for example. Another example of this is when an owner might sell the asset and downsize, resulting in a sum of money that can be used for retirement living or to fund the tertiary education of a child.

In general, the concern with including subsidised ownership housing in a typically high-value property area is that it would not offer a sustained solution to the need for a perpetual stock of affordable housing within that particular spatial area. The challenge with subsidised ownership models for social housing, in a country with inequality levels that will take decades to reduce, is that once a home is privately owned, it becomes subject to market forces. A house that is provided very cheaply, but that is in an area where surrounding properties are high, will increase in value very rapidly to become aligned with surrounding housing prices. This would be a very rapid wealth generation strategy for a single generation of housing recipients. If sold at below market-related values, but a high value for the low-income person, this practice would essentially be a redistribution of government subsidies to the wealthy who are able to purchase these units. One mechanism to avoid this, and something that certainly warrants further investigation, is placing regulations within title deeds that limit the ability of a homeowner to re-sell within a certain period of time. This has other implications for the freedom of individuals to relocate, for example.

The next generation of owners (generation referring to the next set of owners, i.e. the next buyer, which could be a matter of months or just a few years) do not have the same access to “affordable” housing options in the centre, unless there is a constant new supply of subsidy houses to first-owners, which would be an unsustainable burden on the state.

Social housing, as a rental model, ensures that there is affordable housing in the centre, in perpetuity. Caps on how high the rental can be raised each year ensure that this housing supply remains targeted at the upper-lower and lower-middle income groups.

Surely poor people want a house with a garden on all four sides?

This assumption that has permeated housing planning for decades, yet has very little research that supports it. In every income group there are individuals and families who prefer a free-standing property. However, for many different reasons, people also prefer smaller properties on multiple floors and in smaller areas. Some of the benefits to living closer to town in apartment-style complexes include: access to communal areas that are maintained collectively or through service providers; proximity to schools; easily accessible work places and night life; greater levels of safety; and the convenience of “lock up and go”.

Apartments that offer these qualities and are/were still relatively affordable attract people of all races and income groups – as is the case in areas like Wynberg, Kenilworth, Parow, Maitland and Woodstock.

But walk-ups don’t sell in the townships. Doesn’t this prove that poor people want a house with a garden?

The difference between successful township walk-up property developments and unsuccessful ones relates to broader investment in surrounding amenities and economic opportunity – just like housing markets elsewhere.

If a development takes place in a severely under-developed area, lacking in good schools, public spaces, family recreational centre, after-hours entertainment, leisure and similar facilities and places of work, it is unlikely that a strong demand, even in the “gap” market (R350 000 region price per unit in Cape Town’s outlying suburbs), will exist when for R400 000 a similar property, albeit perhaps older, can still be purchased or rented in areas much closer to economic opportunity, with established community and entertainment facilities. (As a local example, compare the attractiveness of a townhouse in Macassar to the attractiveness of an apartment in Maitland for the same price).

Isn’t integration unrealistic? After all, inequality exists around the world.

This statement is a remnant of the apartheid era, convincing us that segregation is normal or natural. This legacy is reflected still today in the structure of our city, the structure of our schooling and the structure of our economy.

A more integrated society can only be built by actively designing opportunities for interaction, co-creation of community and collaborative economic development. Yes, where inequality exists, pockets of relative wealth and relative poverty exist, but often in a far more nuanced manner than exists in Cape Town.

What is the Cape Town Partnership doing about affordable housing?

Last year, the Cape Town Partnership and National Association of Social Housing Organisations (NASHO) co-hosted a workshop with experts from the Netherlands and Canada. Earlier this year, Communicare hosted Toronto Community Housing (TCH) for a two-week lesson-sharing exchange in which the Cape Town Partnership participated.

Going forward, we want to engage closely with communities in and around the central city to find out more about what kinds of housing people want, and what opportunities currently exist.  We will also be working with government officials, the Social Housing Organisations, and wider interest groups like the Development Action Group to promote new ways of designing, implementing, and managing social housing so that it is built in a more integrated and inclusive way.  Only by doing this will we be able to ensure that housing is not just a roof, but a lever for true societal change in our city and country.

For more details on the lessons, tools and way forward, or if you would like to get involved, please contact Jodi Allemeier ( and Andrew Fleming (

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