How aligning transport and housing policies can boost South Africa's job market

To unlock job creation, South Africa needs reform to ease barriers to business, align its transport and housing policies, as well as tackle urban planning.

This includes prioritising housing near public transport, promoting rental housing near city centres and reforming restrictive building regulations.

This is according to the latest Organisation for Economic Cooperation and Development (OECD) report which says that South Africa has extraordinary growth potential, however, low public investment and high costs of doing business have been holding back growth. Major structural reforms are needed to boost productivity and advance the country towards meeting its goals of durably reducing poverty and unemployment, the report said.

The latest OECD Economic Survey of South Africa projects that real GDP will grow by 1.3% this year and 1.4% in 2026. It said unemployment would remain elevated, at close to 32% in 2026. Inflation is projected to decline to 3.2% this year before increasing to 4.2% next year as economic activity gains momentum.

Structural reform

“Prudent macroeconomic policies and structural reforms are central to durably boost productivity and employment,” Luiz de Mello, the OECD Director of Country Studies said, presenting the survey in Pretoria alongside Ashor Sarupen, South Africa’s Deputy Minister of Finance.

“Public spending should be controlled through strengthened fiscal rules and refocused, notably to allow for higher public investment while protecting social spending,” he said.

For many South Africans, the housing scenario can be described as a 40 sqm house, some 40 km from the place of work and households spending 40% of their income on transport, according to Associate Professor Francois Viruly, of the Department of Construction Economics and Management at the University of Cape Town (UCT).

Affordable housing

He said recently that while historic factors such as the apartheid city planning continue to influence spatial inequalities, there is much more that could be done to redress the situation. For this to change, the professor said the country needed to densify areas of Cape Town that are well located and have the appropriate infrastructure capacity. It also means shifting from "green field '' to ''brownfield'' developments and changing the use of existing buildings, which have become obsolete, he added.

Unless the economy manages to recoup the loss of 245,000 jobs that occurred in the first quarter of this year, it would be tantamount to self-inflicted economic sabotage if the Monetary Policy Committee (MPC) does not continue with its rate-cutting cycle, which is progressing at a snail’s pace, said Dr Roelof Botha, an economist and advisor to the Optimum Financial Services Group.

 The current climate of uncertainty is being felt universally, with geopolitical tensions contributing to economic volatility, not just here in South Africa, but across the globe, said Adrian Goslett, Regional Director and CEO of Remax Southern Africa.

“While challenges exist, we have always seen that the South African property market shows remarkable resilience when approached with the right strategy,” Goslett said.

Global tensions

The real estate company said in today’s unpredictable economic landscape, property investment remains one of the most reliable methods for building and preserving wealth. It added that whether it’s VAT hike reversals, interest rate changes, or global political tensions, savvy investors know how to navigate volatility to their advantage. The secret lies in adopting the right strategies tailored to suit uncertain times, it said.

Local buyers in South Africa are facing material shortages, steep price increases, and longer lead times for essentials such as steel, aluminium, solar panels and electrical components, due to the mooted US tariffs, said Nolubabalo Tsolo, the Executive Director of the Association of South African Quantity Surveyors (ASAQS) earlier this week.

She explained that contractors were struggling to manage the rising costs and this leads to risks to premiums to tenders. According to the professionals' body, this meant that projects - from roads and bridges to schools and affordable housing - risked exceeding their budgets.

In addition, currency fluctuations are making dollar-priced imports even more expensive. All this puts strain on both public and private projects, with affordability and delivery timelines being reassessed, she said.

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