By Make the Shift and Ndifuna Ukwazi
Cape Town has a global reputation as a premier tourist destination and a real estate goldmine.
However, beneath the glossy surface of luxury developments and skyrocketing property values lies a troubling structural shift.
An upcoming preliminary report, The Financialisation of Housing in Cape Town, written by Sam Freeman, director of Legal Research and Advocacy at Make the Shift and Robyn Park-Ross, Urban Planning Research consultant for Ndifuna Ukwazi, set for release this June, warns that treating housing primarily as a financial asset rather than a home is actively destabilising the city’s fragile housing system.
Based on extensive desktop research and fieldwork, including interviews with 28 key representatives across the private sector, government, civil society and academia, the report outlines how the financialisation of housing is shaping the Mother City. The preliminary findings present a stark look at a city wrestling with its own space.
What is the financialisation of housing?
Globally, the scale of the housing crisis is unprecedented: roughly 1.8 billion people live in homelessness or severely inadequate housing. Yet, property prices continue to rise exponentially, radically outpacing local wages.
This disconnect is partly driven by “financialisation”, that is the phenomenon where homes are used as commodities to park, grow, leverage or hide big money. It refers to structural changes in housing and financial markets and global investment, where housing is treated primarily as a commodity or asset, a means of accumulating profit and wealth and often as security for financial instruments that are traded and sold on global markets.
Housing financialisation in Cape Town has been enabled by, among others, Apartheid-era economic and housing policies, the timing of the transition to democracy wherein neoliberalism had become the dominant economic paradigm, the 2000s housing boom amid wage stagnation, and current policies promoting housing as an investment.​
This has led to a large set of private sector actors, including asset managers, institutional real estate investors, corporate landlords and developers, short-term rental platforms, as well as banks and pension funds, being involved in the residential real estate sector in the city.​
There is evidence of this happening across multiple market segments in Cape Town, but perhaps the most prominent manifestations, and those we primarily focus on in the report are:​
- Investors purchasing and developing properties in the luxury-, middle- and affordable housing sectors for both rental and homeownership. ​
- And the short-term rental sector, which has seen major growth with listings nearly doubling between 2022 to 2025. Strikingly, Cape Town now has more Airbnb units than Barcelona, Amsterdam and San Francisco combined, despite receiving significantly fewer tourists than those global hubs.
However, student accommodation is also a growing area of financialisation in Cape Town, with some firms owning hundreds of units in the city. Similarly, mortgage securitisation is an increasing mechanism of real estate investment in Cape Town and South Africa.
While the financialisation of housing has historically been viewed as a Global North problem, institutional investors are increasingly turning to the Global South.
Cape Town, with its lucrative real estate market, has become a prime target.
The report sets out some of the impacts of the financialisation of housing, but does not suggest that financialisation, housing investors, or housing investment, are the sole cause of Cape Town’s housing problems.
The city’s housing crisis is caused by a diverse range of complex independent and interrelated factors, with financialisation contributing to the crisis, and requiring policy intervention to prevent and mitigate its impact.
Financialisation and spatial apartheid
The evidence gathered for the report leans towards financialisation in its current form having a net negative effect on the lives of Capetonians.
Rapidly increasing property prices and rental costs, and subsequent displacement disproportionately harm Black, Coloured and Indian families, further entrenching economic deprivation and pushing working-class residents to the urban periphery, and reinforcing the patterns of racial segregation entrenched by colonialism and apartheid.
This directly challenges Section 26 of the South African Constitution, which recognises the right to adequate housing, defined internationally as housing that is affordable, secure, well-located and sustainable.
Suggestions for intervention
To protect the constitutional right to housing, research participants proposed a suite of concrete policy interventions:
1.Supply-side subsidies and tax relief
To combat high land and construction costs that drive developers toward the higher-end and luxury markets, interviewees argued the state must intervene. Proposals include releasing state land at zero cost for affordable housing, zero-rating affordable housing in terms of VAT, and having the municipality actively purchase affordable units built by the private sector.
2. Stricter regulation of short-term rentals and foreign buyers
Participants, including Airbnb representatives, agreed that increased STR regulation is essential.
There are also calls to regulate speculative buying by European and Western foreign individuals and institutions, potentially restricting foreign property purchases to specific zones where affordability is less strained.
3. Taxation proposals
To curb housing monopolies, participants proposed an “economies of scale tax,” which applies higher tax rates to corporate landlords owning large numbers of properties. Another major tool discussed is land value capture via a 30% rezoning levy on newly up-zoned land, alongside a dedicated tourism tax on STRs. Crucially, all proposed tax revenues would be ring-fenced exclusively for affordable housing delivery.
4. Rent control and guarantees
Civil society participants advocate strongly for rent control, suggesting that rent increases should be capped according to local median household incomes so residents pay what they can afford, rather than what the market could bear. Others suggested adopting Barcelona’s model of rent guarantees for affordable housing tenants, which would both assist developers and landlords to create affordable homes, and help protect tenants from eviction for non-payment of rent
5. Promotion of impact investment
Greater promotion of impact investment is suggested, such as the model employed by Divercity, a South African affordable rental housing developer, and others.
6. Community-led alternatives
Moving away from pure private-sector reliance, the report champions models like Community Land Trusts.Giving communities the right of first refusal on local development land and providing low-cost loans or blended finance would shift the power balance back to residents, and increasing the viability of community-led development.
7. Greater state delivery of affordable housing
Some participants suggested that there was a need to return to the state-delivery of affordable housing. And whilst it was recognised that the City of Cape Town may lack the resources to build affordable homes at the scale needed, financing suggestions, such as the use of development bonds to obtain capital from outside investors were put forward as a way for the city to access the funds required to build affordable homes at scale. ​
8. Meaningful engagement
Participants noted that promoting meaningful engagement in development decisions is crucial for protecting human rights, as current efforts are insufficient and often overlook key community perspectives.​ Interviewees noted that greater effort is needed to include the perspectives of Black, Coloured, and Indian households in development processes, as Cape Town’s history of dispossession has often silenced these voices.
9. Protect the existing systems and institutions in place to protect housing rights
It is also crucial to protect the existing systems and institutions in place to protect the right to housing such as the Prevention of Illegal Eviction Act and the Rental Housing Tribunal.
A system working as intended?
The report leaves Capetonians with uncomfortable, fundamental questions about the future of urban development:
- Is it possible to realise the human right to housing when a property’s financial value is constantly in competition with its social value?
- Can we truly end a housing crisis if gentrification, displacement, unaffordability and homelessness are the signs of a housing market working exactly as it was designed to?
The full report, will be released in June. www.maketheshift.org and www.nu.org.za
