Contractor failures, cost overruns, and funding issues leave thousands waiting as national social housing projects stall, threatening billions in public funds.
Stalled social housing projects nationally have left thousands of beneficiaries in limbo as costs spiral, contracts collapse and contractors fail.
The state’s efforts to deliver affordable housing are grinding to a halt as multiple social housing projects across the country stall amid contractor failures, financial shortfalls and governance shortcomings.
According to the Social Housing Regulatory Authority (SHRA), at least 10 major developments, from Midrand in Gauteng to Secunda in Mpumalanga, Kimberley in the Northern Cape to Newcastle in KwaZulu-Natal, have come to a halt and billions of rands are at risk.
Social housing in South Africa faces delays
The SHRA report, presented to parliament’s human settlements portfolio committee, revealed that 52 active grant-funded projects are underway nationally, but a worrying number are “blocked” due to spiralling costs, funding withdrawals, non-performance by developers or compliance lapses.
Several stalled schemes were costed before the Covid pandemic, with budgets now hopelessly outdated.
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In Gqeberha, the Steve Biko project has completed 109 units but the remaining homes are unfinished following community unrest, fire safety compliance issues and the liquidation of the original contractor, a collapse which cost the project R12 million.
Clayville, near Midrand, has been halted entirely after its main contractor was terminated and the implementing agency ran out of money.
Newcastle’s major 1 056-unit Hospital Street development, seen as a cornerstone for social housing delivery in KwaZuluNatal, was derailed by Covid-era cost escalations, violent community protests and devastating flood damage in late 2023.
Contractors fail and costs soar
The Development Bank of Southern Africa (DBSA) Infrastructure Fund withdrew support after finding that the land transfer process breached the Municipal Financial Management Act requirements, leaving hundreds of completed units abandoned and funding undecided.
In the Northern Cape, Kimberley’s Hull Street project has exhausted its grant funding after two contractor terminations, with the current builder having ceased work as the site was no longer financially viable.
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In Mpumalanga, the Kwandokuhle project sits at just 50% completion.
Severe cost overruns have crippled progress after errors in the original budget, unforeseen soil conditions and professional team failures.
About R133 million in grant funding has been allocated, with costs ballooning from R193 million to an unconfirmed amount.
Unfinished blocks stand idle
The crisis extends to Gauteng, where Instratin, one of the largest social housing developers, has failed to complete several major projects, including Devland Gardens, Carnival Gardens and Midrand Heights.
While hundreds of units have been built and occupied, unfinished blocks stand idle.
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The state housing entity has since issued termination notices for three Instratin developments, citing ongoing non-performance.
The biggest warning sign, however, comes from Bridge City in KwaZulu-Natal, where only 39% of work has been completed despite 64% of funding being drawn.
The developer collapsed under capacity constraints after failing to meet DBSA loan obligations.
SHRA seeking urgent funding top-ups
According to the report, SHRA is seeking urgent funding top-ups through 2025-26 budget reprioritisation (option A) or external financial support from National Treasury (option B). Termination of projects (option C) would write off R553 million as unrecoverable sunk costs.
Department of human settlements director-general Alec Moemi said it will take a few years to rescue the failed projects, but it was the department’s priority.
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