Housing Affordability in Cape Town: Evidence and Policy Recommendations

Allan Davids ()
Additional contact information
Allan Davids: University of Cape Town

No 410, ERSA Working Paper Series from Economic Research Southern Africa

Abstract: Rising housing costs have become a central issue in Cape Town. I assess the commonly cited causes of rising prices against the available public data and evaluate the policy options according to which sphere of government has the power to implement them. I argue that growing demand has met a housing supply that responds weakly to prices. Migration from other provinces is the cause most likely to affect prices across the city, while the effects of foreign buyers and short-term rentals are concentrated in a few coastal and central suburbs. Supply is constrained by land-use rules and slow approvals, water and sewer networks at capacity in parts of the city, a construction industry that has not grown with the city and a sharp fall in state housing delivery. Cape Town therefore faces two distinct affordability problems: rising prices in the formal market, and the larger problem that most households cannot afford formal housing at all. The measures the public demands most, rent control and a tax on foreign buyers, are national powers with weak supporting evidence. The City’s own tools, namely land-use rights, property rates, bulk infrastructure and the land it owns, can be used to expand housing in well-located areas, support small-scale rental housing and target specific sources of pressure such as short-term letting.

Keywords: Housing affordability; housing supply; land-use regulation; migration; short-term rentals; Cape Town (search for similar items in EconPapers)
JEL-codes: R21 R23 R31 R38 R52 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2026-10
References: Add references at CitEc
Citations:

Published in ERSA Working Paper Series, October 2026, pages 44

Downloads: (external link)
https://ersawps.org/index.php/working-paper-series/article/view/410/230 First version, 2026 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rza:ersawp:410

Access Statistics for this paper

More papers in ERSA Working Paper Series from Economic Research Southern Africa
Bibliographic data for series maintained by Maggi Sigg ().