SA Unveils R26.9 Billion Housing Budget Amid Growing Backlog and Funding Pressures

South Africa’s Human Settlements Minister Thembi Simelane has unveiled a R26.972 billion budget allocation for the 2026/27 financial year, outlining ambitious housing delivery plans aimed at tackling the country’s growing housing crisis, improving living conditions, and restoring dignity to vulnerable communities.

Presenting the Department of Human Settlements’ Budget Vote in Parliament, Simelane said the allocation forms part of a broader R81.364 billion Medium-Term Expenditure Framework (MTEF) aimed at advancing sustainable human settlements across the country.

However, the Minister also warned that major budget cuts over the medium term are placing increasing pressure on the government’s ability to meet housing demand and delivery targets.

Housing Sector Faces Mounting Financial Constraints

According to Simelane, the department’s baseline budget has been reduced by:

• R20.6 billion over the MTEF period

One of the biggest impacts has been on the Urban Settlements Development Grant (USDG), which has been reduced by:

• R19.7 billion over the MTEF period

The reductions include:

• R5.7 billion cut in 2026/27

• R6.4 billion in 2027/28

• R7.1 billion in 2028/29

The Minister said the cuts were necessary to support metro trading services but acknowledged that they would significantly affect housing delivery capacity.

Government Sets Ambitious Housing Targets

Despite financial pressures, the department has announced a series of ambitious targets for the current financial year.

Planned delivery goals include:

• Construction of 39,058 housing units

• Completion of 25,186 serviced sites

• Registration of 21,918 title deeds

• Delivery of 2,878 social housing units

• Full tenant occupation of 2,000 social housing units

• Eradication of 6,950 mud houses

• Delivery of 744 housing units for military veterans

• Installation of 11,215 solar systems for energy resilience

The department also plans to:

• Unblock 195 stalled housing projects

• Approve 11,358 First Home Finance subsidy applications

• Disburse 9,231 housing subsidies to qualifying beneficiaries

Housing Delivery Still Falling Short

Simelane admitted that housing delivery remains below expectations.

During the previous financial year:

• Only 23,027 housing units were completed

• Against a target of 37,779 units

The Minister said the government would now take stronger action against:

• Underperforming contractors

• Procurement delays

• Administrative inefficiencies

“This situation cannot continue,” Simelane told Parliament.

Major Progress Reported Despite Challenges

Despite funding limitations and logistical difficulties, the department reported several achievements during the previous financial year.

Key progress areas included:

• Eradication of 8,176 unsafe mud houses

• Unblocking of 85 stalled housing projects

• Acquisition of 2,447 hectares of land for housing development

• Delivery of 24,251 serviced sites

• Construction of 3,031 social housing units

Officials noted that serviced site delivery significantly exceeded the annual target of 13,995 sites.

Social Housing Programme Creates Jobs

The Minister highlighted the economic impact of the social housing programme, stating that it generated:

• More than 12,000 job opportunities nationwide

The government sees social housing not only as a shelter programme but also as a tool for:

• Economic stimulation

• Employment creation

• Urban regeneration

• Infrastructure development

Property Sector Transformation Efforts Expanded

Simelane also highlighted progress in transformation and skills development within the property sector under the Property Practitioners Act.

Under the:

• One Learner, One Property Practitioner Programme

the department placed:

• 619 candidate property practitioners with industry employers

The programme is intended to:

• Improve workplace learning

• Expand access to the property industry

• Promote transformation

• Support long-term participation by historically disadvantaged groups

The department also exceeded its women empowerment target through the:

• Principalisation Programme

supporting:

• 1,153 womenagainst a target of 484.

Government Pushes Innovative Building Technologies

The Minister said the government remains committed to accelerating housing delivery through Innovative Building Technologies (IBTs).

Under new policy direction:

• At least 2% of the Human Settlements Development Grant (HSDG)may now be allocated to IBT-related housing projects.

These technologies are expected to:

• Speed up construction

• Improve climate resilience

• Lower long-term costs

• Support sustainable housing development

The department also plans to prioritise:

• Local manufacturers

• Emerging contractors

• Youth-owned enterprises

• Women-led businesses

• Township-based enterprises

to ensure broader economic participation and job creation through the housing sector.

South Africa’s Housing Crisis Remains Severe

Simelane acknowledged that South Africa continues to face a deep and complex housing challenge driven by:

• Rapid urbanisation

• Historical spatial inequality

• Population growth

• Infrastructure pressures

• Rising housing demand

The country’s housing backlog is currently estimated at:

• 2.6 million housing units

Municipalities continue to face growing pressure to provide:

• Housing infrastructure

• Basic services

• Land access

• Urban planning solutions

particularly in rapidly expanding urban centres.

Housing Linked to Dignity and Social Stability

The Minister concluded by stressing that housing delivery is about more than physical infrastructure.

“Housing is more than shelter. It is about restoring dignity, hope and security,” Simelane said.

The budget reflects the government’s continuing attempt to balance fiscal pressures with urgent demands for housing, urban development, and social inclusion in one of the country’s most pressing policy areas.