Growth nodes fuel SA’s Affordable Housing shift

• Densification done right strengthens infrastructure, walkability and long-term urban sustainability.

• Mixed-use precincts prove social inclusion and commercial returns can coexist.

• Commercial discipline is essential to scale affordable housing impact.

A structural shift in how cities grow

South Africa’s affordable housing market is not simply expanding, it is being reshaped.

Across major metros, spatial planning, zoning reform and infrastructure alignment are driving a more intentional approach to urban inclusion. The focus is shifting from unchecked sprawl to structured densification within economic growth nodes.

At the centre of this evolution is TUHF Limited, a specialist commercial property financier that has funded over R8.3 billion in affordable rental housing since 2003, supporting more than 50,000 units across South Africa’s metros.

According to Velda Derrocks, TUHF’s Client Coverage Executive, inclusion starts with planning.

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“Inclusive development is about how cities intentionally structure urban growth. It is about rethinking economic activity, transport systems, zoning, and densification in a way that starts correcting historical spatial inequalities.”

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Densification: Clearing up the misconceptions

Too often, densification is confused with overcrowding.

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“Densification is not a fancy word for overcrowding. It is about making maximum legal and compliant use of the available space in a manner that supports sustainability and not undermine it and using design as a social stabiliser and not an afterthought,” says Derrocks.

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In practice, effective densification in South Africa typically sits in the three- to six-storey range, not high-rise towers. This typology:

• Is cost-efficient to build

• Supports walkability

• Integrates into existing neighbourhood fabric

• Works well for mixed-income and social housing

It can also involve redesigning oversized units to improve yield and affordability simultaneously, increasing rental accessibility while maintaining landlord viability.

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Importantly, density supports infrastructure efficiency. “When more people live within structured nodes, it becomes easier to maintain roads, utilities and security. The real strain comes from sprawl, not density,” she explains.

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Municipalities such as the City of Cape Town have moved proactively, revising planning bylaws and introducing incentive overlay zones to streamline rezoning and verify infrastructure capacity before enabling new development. Internal alignment between planning, utilities and budgeting departments is key.

You cannot densify without checking whether the pipes, power and roads can handle it.

‍Mixed-use precincts and Public Private collaboration

Urban inclusion works best when public and private stakeholders align around long-term outcomes.

A flagship example is the Conradie Park development in Cape Town, a partnership between provincial government, the Department of Human Settlements, the City of Cape Town and private developers.

The result is a mixed-use node that integrates:

• Social housing

• Open-market residential units

• Schools

• Retail and commercial amenities

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“This shows what mixed-use urban inclusivity can look like. Different income groups are living in one integrated node,” says Derrocks.

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These precincts reduce commuting distances, stimulate local economic activity and anchor infrastructure upgrades, all while remaining financially viable.

The lesson is clear: inclusion does not mean sacrificing returns. It means structuring projects differently.

Demand dynamics are reshaping the map

Affordable housing demand follows economic activity. In Cape Town, inward migration and displacement pressures are driving demand in well-located nodes. In Johannesburg, young professionals are attracted by employment access and comparatively lower living costs.

Policy also matters. Properties valued up to R1.21 million remain exempt from transfer duty under current SARS thresholds, reducing transaction friction for entry-level buyers and sectional title investors.

While TUHF is best known for funding rental entrepreneurs, it also supports greenfield developments for open-market sale, reinforcing the ownership segment of the affordable market.

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Another evolving factor is student accommodation. “Student accommodation often yields higher returns per unit, which can crowd out traditional family rentals in certain areas,” notes Derrocks.

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TUHF caps student accommodation exposure at 25% of its loan book to manage concentration risk and maintain housing balance.

Beyond primary metros, growth nodes are emerging in secondary municipalities adjacent to economic hubs, where affordability pressures in core cities are pushing residents outward. Urban inclusion is no longer just an inner-city story.

Commercial discipline enables social impact

Affordable housing cannot rely on goodwill alone.

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“We are a profit-driven business. Commercial returns enable us to deepen our impact. If landlords remain viable and profitable, they continue investing in affordable housing supply,” says Derrocks. This is a critical distinction.

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Affordability for tenants and sustainability for landlords must coexist. Rising utility costs, infrastructure constraints and construction inflation demand smarter design and operational efficiency.

TUHF’s focus on refurbishment expertise, sustainable building design and access to green funding mechanisms strengthens this balance. Efficiency is not cosmetic, it is fundamental to keeping rental stock accessible.

Over two decades, TUHF has demonstrated that disciplined underwriting, localised market knowledge and entrepreneur support can regenerate urban areas at scale.

Long Term Impact: Rewiring the urban future

The next phase of affordable housing growth will not be defined by isolated projects, but by coordinated urban strategy.

Densification within serviced nodes. Mixed-use precincts anchored by public–private collaboration. Policy alignment that reduces friction and unlocks capital.

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“Success in the next three to five years means strengthening our commercial performance while expanding measurable social impact,” says Derrocks. “If we scale localised interventions responsibly, we contribute meaningfully to South Africa’s sustainable and prosperous urban future.”

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South Africa’s housing challenge remains significant. But within its growth nodes lies opportunity, not only to deliver units, but to reshape cities.

Done correctly, affordable housing becomes more than shelter.
It becomes the engine of inclusive urban regeneration.

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