Rising demand in SA’s affordable-housing market is prompting a fresh wave of investment from large construction and property firms chasing scale and stable returns.
The affordable-housing segment is reaching boiling point as activity picks up noticeably amid rapid urbanisation and a persistent housing backlog. Leading developers are shifting their focus to the market, drawn by the scale of demand and the prospect of robust long-term returns.
Diversified property developer Calgro M3 noted in its 2025 annual report that, with SA’s population now exceeding
60-million and only 6.7-million formal housing units available, the country continues to face a significant housing shortfall.
“End-user demand is concentrated in the affordable segment, as SA’s income distribution is skewed heavily towards the lower end. The formal middle- and upper-income housing markets are saturated and dependent on an over-indebted consumer base,” said Garreth Elston, MD of equity research firm Golden Section Capital.
“Meanwhile, there's a persistent housing backlog of around
2.5- million units, particularly in the R500,000 to R1m price range — that’s where volume demand exists.”
According to the latest FNB Agents Survey, 66% of agents expect increased activity in the affordable-housing segment, buoyed by the recent interest rate cut. In contrast, only 23% foresee growth in the traditional market, with seasonality and economic pressure weighing on sentiment.
Calgro spotted demand to be particularly rife in metropolitan hubs such as Gauteng and the Western Cape, where access to economic opportunities continues to attract homebuyers, it said its annual report.
One of the Calgro’s largest projects is under way in the Bankenveld District City development, in partnership with Eris Property Group. Acquired last year, the site is located near Sandton and the Marlboro Gautrain station and will deliver 20,000 affordable-housing opportunities. It is also one of the last major undeveloped parcels in the area.
Meanwhile, construction group Raubex is also securing a share of the affordable-housing market, with several major projects under way amid renewed activity driven by interest rate cuts.
These include a 2,900-bed student housing project for the University of Limpopo, the 1,446-bed Power Park student residence near the University of Johannesburg, as well as housing developments in Stellenbosch and the Lufhereng project in Soweto.
Balwin Properties, SA’s largest sectional-title developer, has secured a R1bn funding deal from the International Finance Corporation (IFC) to support the development of more than 14,500 affordable apartments at its Mooikloof Smart City project in Tshwane.
“Balwin, Calgro M3 and Raubex leaning more heavily into affordable housing is not a matter of altruism, it’s about responding to market realities and regulatory incentives in a low-growth, high-barrier operating environment,” Elston said.
He said government subsidies and partnerships help mitigate risk for developers. Programmes such as the Finance Linked Individual Subsidy Programme and other inclusionary housing initiatives create near-guaranteed demand.
Last year, the IFC committed about R1-trillion to private companies and financial institutions in developing countries.
While these signals growing support for emerging markets, Roelof Botha, economic adviser to the Optimum Investment Group, said the facility extended to Balwin represents just 0.1% of the IFC’s latest budget — indicating huge potential for similar funding to other SA residential property developers.
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