CAPE TOWN, Western Cape — Affordable housing in the Western Cape is rapidly disappearing, with properties priced below R900,000 becoming exceptionally scarce, according to a new provincial housing market study. Western Cape MEC for Infrastructure, Tertuis Simmers, warns that this growing affordability crisis is increasingly pricing out middle-income earners and essential workers from the property market.
The study highlights a widening gap driven by multiple factors. Semigration, as individuals relocate to the province for a better quality of life, combined with the Western Cape maintaining the lowest unemployment rate in the country, has significantly driven up property demand. Consequently, housing prices are outpacing income growth. Simmers noted that private developers are heavily incentivized to cater to the higher-end luxury market above the R900,000 mark, leading to a massive neglect of the “missing middle” or gap market.
A central point of contention is the income threshold for state-assisted housing programs. Currently, the threshold for the first home finance program and social housing is capped at a monthly salary of R22,000. Simmers emphasized that this benchmark has been in place for many years and is no longer realistic. Citing independent studies by FNB and the Financial Services Commission (FSC), he pointed out that true affordability in the current gap market—accounting for inflation and the rising costs of electricity, water, sanitation, refuse, and insurance—requires a salary band of R33,000 to R38,000 per month.
The provincial government has been lobbying the National Department of Human Settlements for six years to increase this threshold. Simmers stressed that adjusting this policy would unlock the ability to assist 58,000 people currently on Western Cape waiting lists who fall into this missing middle category.
The impact of the current cap is deeply felt by essential workers. Teachers, nurses, and policemen who earn above the R22,000 threshold are routinely locked out of first-time ownership, forcing them to live far from the communities they serve. To prove the viability of a higher threshold, the province implemented a pilot project in Atlantis, known as the Milwood Park housing project. This initiative introduced incremental housing and successfully demonstrated that a viable market exists when the framework is adjusted to reflect living realities.
To fast-track affordable developments close to city centers, the provincial government has been on a reform mission to utilize state-owned land. Over the last two and a half years, the province has released strategically located parcels within 10 kilometers of the city CBD, including Founders Garden, P-Switch, Leo, and two other sites within 700 meters of the central business district. The City of Cape Town has complemented these efforts with its own land releases.
Simmers explained that introducing these land parcels to the market is designed to bring down the cost per unit and normalize the supply-and-demand dynamic. Over time, increasing the supply of affordable rental options through social housing and ownership opportunities through first home finance will help minimize and normalize city-center rental costs. However, he cautioned that the government cannot achieve this alone after 30 years of trying; a sustainable model requires the private sector to come on board, which is only viable if the income threshold policy is reformed.
Addressing broader economic concerns, Simmers acknowledged the challenge the housing crisis poses to job opportunities and talent retention. While the Western Cape continues to attract competent, young, skilled individuals to its primary and secondary cities, the high cost of renting and establishing a new home remains a major barrier. This financial hurdle is particularly detrimental to attracting skilled professionals to local government and specific sectors in areas beyond the secondary cities, where lower industry salaries clash with the high cost of living.
Reforming the affordable housing threshold remains the critical next step to ensuring that both social housing and first home finance programs can effectively serve the working families who keep the province running.