Africa-Press – South-Africa. Over 80% of South African households are priced out of the formal property market due to systemic issues such as stagnant economic growth, rising construction costs, restrictive labour policies, slow land release, and burdensome regulations.
In June 2025, Lightstone reported that one formal house exists per 3.3 families who earn less than R26,000 per month. This accounts for more than 80% of South African households.
Sentinel Homes managing director Renier Kriek said the overwhelming majority of South African households are currently priced out of the local property market, and this trend is worsening.
“There’s something very wrong if such a large demand is not being met,” Kriek said. “Although the problem is well known in the property industry, no real solutions are forthcoming from the government actors who are responsible for solving these problems.”
He explained that the root causes are mainly systemic and need to be addressed by the government.
“It is simply not acceptable that since 2000 we have added 19.3 million inhabitants in South Africa, but our economy has managed to produce only 1.9 million homes,” he said.
Not only are there not enough houses, but Kriek said new developments are victims of rising construction costs, making each generation of property less affordable to consumers than previously.
In fact, property prices have been outpacing wage increases for the past 70 years, not only in South Africa but in most of the world.
Add to this trend South Africa’s weak economic growth, which results in low job creation and wage growth, and it’s easy to see why affording a home is becoming increasingly complex for low- to middle-income earners.
Structural changes
Sentinel Homes managing director Renier Kriek
According to Kriek, certain things need to change outside the property market before problems can be tackled from within.
First, he said South Africa needs economic growth driven by a consistent economic policy. In addition, the mismanagement of state and parastatal finances needs to stop.
“For example, paying CEOs of dysfunctional utilities more than the Prime Minister of the United Kingdom is wasteful and robs citizens of funds that could go towards housing,” he said.
There is also a need for structural reform. He said foreign investment coming into South Africa does not create infrastructure or jobs. It’s portfolio money that can easily be withdrawn.
“The country needs structural reform that embraces deregulation, labour market reforms, trade liberalisation, privatisation or public-private partnerships, and tax reforms to encourage infrastructure investment,” he said.
This may also require currency devaluation, which is a difficult political proposition and is unlikely to be popular with wealthy consumers.
Another problem is that artisans are retiring faster than they can be replaced, which puts upward pressure on housing production costs.
Most of South Africa’s workforce is not well-suited to its services-oriented economy. It needs to reindustrialise to create jobs for the skills it has, encouraging technical trades, such as plumbers or electricians.
“South Africa’s restrictive labour policies make labour much more expensive than in competing economies, such as Bangladesh or Sri-Lankha,” Kriek added.
This could be resolved by devaluing the currency, reducing imports, or simply by liberalising labour laws.
That might mean workers are paid less, but more people will have jobs, creating an economy that works for all. “This would be a temporary situation that will correct itself as more jobs are created.”
“Making such changes at a national level will ensure that problems in the property market are not intractable. But these necessary reforms will also go a long way toward rejigging the economy generally for the better.”
Simplifying the process
A major part of the solution is the faster release of new land for development, Kriek said. “Socially responsible public comment and input must be part of a well-structured and well-managed but shortened process.”
Some processes, like an environmental impact study, could be run concurrently with others or even be eliminated entirely for some areas.
“Ideally, processes would be designed to be carried out in advance on land earmarked for development, and developers would be told which land is available without having to wait.”
“For example, municipalities may conduct environmental impact assessments in advance on peripheral areas earmarked for development.”
According to Kriek, lender and landlord protection are also key parts of solving the housing crisis. Home financers or landlords are often seen as large bureaucratic and potentially predatory institutions that do not invite sympathy from the public or the courts.
“Yet, they provide an invaluable service by transforming the shorter-term savings of ordinary South Africans into capital that goes to home loans and housing developments, among other longer-term investments.”
“Eviction procedures and foreclosures need to be rationalised, and their timeframes shortened to ensure that, while consumers must be treated fairly, this important function is not put at risk through delays and procedural disadvantages.”
Kriek explained that burdensome termination procedures disincentivise capital deployment into the provision of housing finance or rental housing.
“If 80% of South Africans cannot afford a home, and developers are unwilling to meet the demand, something is terribly wrong. It’s not an innovation or economic problem but a systemic one that the government needs to rectify,” he said.
The problem is market design, and that is something which the government must make an effort to reform.
“The private sector is profit-driven and the demand clearly exists, so it’s up to the government to create the incentives and ease the restrictions that prevent the private sector from earning its bread in the provision of affordable housing,” he said.
“There’s more than enough money floating around – government just needs to create a market that provides incentives for the available resources to flow to where the demand already exists.”
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