Housing wealth accounts for up to 65% of the total assets of the average South African household, yet its potential to reduce inequality is reduced by the persistent “stickiness” of apartheid geography. Using 2008-2017 data, the authors find that over 90% of individuals from marginalised groups remain in areas historically designated for their race, and even those who move to formal urban centres face returns that are deeply stratified by race. As the absolute gap in housing wealth between white and African urban residents continues to widen, the research highlights the emergence of “spatial traps”—where state-provided housing offers physical shelter but fails as a wealth-building asset.

Housing accounts for between 40 and 65 percent of the total assets of the average South African household. But whether rising property prices help reduce or reproduce inequality depends on the dynamics between housing markets in urban, rural, formal, and informal areas.

In our recent research, we examined how post-apartheid spatial mobility has shaped housing wealth. We asked whether South Africans have been able to move out of historically marginalised settlements, and whether such moves translated into meaningful gains in housing wealth. We found that spatial mobility remains limited, and that when it does occur, housing wealth gains are sharply stratified by race.

Housing wealth dynamics

South Africa’s extreme wealth inequality is well documented. Recent estimates indicate that the top 10 percent of South Africans consistently held approximately 85 percent of total household wealth in the 1994-2018 period, with the top 1 percent share of reaching 55 percent of the total in 2017—one of the highest levels of wealth concentration globally.

The spatial distribution of wealth inequality in South Africa today is a legacy of its colonial and Apartheid past. Legislation such as the Natives Land Act of 1913 and the Group Areas Act of 1950 systematically locked out black South Africans from owning land and property, particularly in economically productive urban centres.

Anecdotal evidence across two houses with near-identical physical attributes presented a starting point for our analyses: the change in the value of the house in a historically white neighbourhood over a ten-year period exceeded the change in the value of the house in a historically Indian neighbourhood over a fifty-year period by a factor of at least two.

A large literature has examined post-Apartheid changes in income, employment, and service access. Far less is known about how spatial change — or the lack thereof — has affected housing wealth accumulation. Our research examined how moving from one historically defined settlement type to another affects changes in housing wealth over time, and how these processes differ by race.

In other words, who has been able to realise the wealth-accumulating potential of housing assets in post-Apartheid South Africa?

Tracking Mobility and Wealth

Using panel data from the National Income Dynamics Study (NIDS), we tracked individuals from 2008 to 2017 and categorised residential areas based on their historical position within Apartheid group areas. These settlement types are: 

Tribal Authority Areas (TAA), corresponding to the former ‘homelands’ or Bantustans. They are overwhelmingly African, rural, and characterised by communal land tenure,1 and housed 27-32 percent of the NIDS sample.

Urban Informal Areas (UIA), or informal settlements, typically on the urban periphery with insecure tenure. They are inhabited almost exclusively by African and coloured communities and housed 8-9 percent of the sample.

Rural Formal Areas (RFA), comprising of commercial farms; these are historically white-owned areas and account for 6-7 percent of the sample.

Urban Formal Areas (UFA), the most economically desirable category, including cities, suburbs, and formal townships. It is the largest and most racially mixed (though internally segregated) category, with 45-47 percent of the sample.

Within our framework, ‘exiting’ a segregated space is defined as an individual moving from a tribal authority area or an urban informal area to a rural or urban formal area. It is important to note that we do not track movements within settlement types. While significant mobility may occur within these categories—such as moving to a better-located house within the Urban Formal Area—this specific framework does not capture such movement.

We used imputed rent as a proxy for housing wealth, which measures the value of housing services a homeowner consumes—what they would pay to rent their own home on the open market.

Finding 1: Spatial mobility is rare

We found strong evidence of spatial inertia. The vast majority of people from marginalised race groups—over 90 percent—continue to live in the areas that were designated for their race groups under Apartheid.

This “stickiness” of Apartheid geography is visually demonstrated in Figure 1, which tracks mobility pathways over the decade. The thickest flows show individuals remaining in their original settlement type. Nearly 90 percent of urban formal area residents remained in an urban formal area, and crucially, an average of 94 percent of residents in a tribal authority area stayed in a tribal authority area. The ‘exit’ rate for those in urban informal areas was also marginal. This suggests that for most South Africans, especially those in historically segregated areas, spatial mobility remains the exception, not the rule. The ‘stickiness’ of Apartheid-era geography acts as a powerful structural constraint, limiting access to opportunities and perpetuating poverty. The minority who do ‘exit’ segregated spaces are a highly selective group. They are, on average, younger, more likely to be male, and more economically active than those who remain. This implies that the positive outcomes for those who are able to move are not just linked to the move itself, but also reflect the pre-existing human capital and lower dependency ratios that enabled the move in the first place.

Figure 1: flow of Individuals Across Settlement Types

Each coloured stream traces individuals’ settlement trajectories across survey waves. Most individuals remain within the same settlement category over time, while narrower branches indicate transitions from one category to another. Source: NIDS Waves 1-5; Authors’ analyses

Finding 2: ‘Exiting segregation’ does not mean ‘entering integration’

For individuals who do move into urban formal areas, average imputed rent (and therefore housing wealth) increases substantially. However, this process of wealth creation is neither neutral nor equitable. The economic returns to spatial mobility are deeply and persistently stratified by race.

The first step in understanding this is to disaggregate the urban formal area. The data shows that UFAs are not one single, integrated market but a collection of racially and economically distinct sub-markets. Figure 2 reveals that the entity ‘UFA’ implies something different depending on the race of the inhabitant.

Figure 2: average Imputed Rent by Population Groups and Settlement Types

Source: NIDS Waves 1-5; Authors’ analyses

In Wave 1 (2008), the average imputed rent for white-occupied dwellings in an urban formal area (R2 740) was nearly six times higher than that of African-occupied dwellings in the same settlement type (R461). By Wave 5 (2017), while both groups saw increases, the absolute gap had widened dramatically: average white imputed rent reached R9 424, while average African imputed rent was R1 627. This suggests that the Urban Formal Area is, in all likelihood, an analytical simplification, possibly concealing a deeply segregated internal geography where property values are determined by race. While both groups saw increases over the decade, the fact that the absolute gap between them widened dramatically signals that different racial groups continue to operate in vastly different housing sub-markets. On the other hand, the relative increase for African-occupied dwellings was higher than that for white-occupied dwellings, suggesting a marginal convergence in growth rates even as the absolute wealth divide expanded.

This stratification is not just static; it also defines the gains from moving. An analysis of the mobility pathways (Figure 3) shows that the very act of ‘exiting’ segregation yields racially differentiated returns.

Figure 3: change in Imputed Rent over Pathways by Population Groups and Settlement Types

Source: NIDS Waves 1-5; Authors’ analyses

UIA