Cape Town's housing affordability crisis: 'We're paying the price for years of sluggish policy-making'

John Maytham is joined by Dr Allan Davids, senior lecturer at UCT's School of Economics.

The Mother City's soaring rental and property prices are a source of frustration for many residents, and always a hot topic for debate.

The latest scapegoat taking the heat for rising rents is digital nomads along with short-term rentals, as Johan Roos writes in a News24 piece analysing possible solutions to this affordability crisis.

John Maytham talks to Dr Allan Davids, senior lecturer in the School of Economics and director of the Financial Innovation Hub, both at the University of Cape Town (UCT).

The challenge of housing supply is not something new as Davids points out - while Capetonians live in a city with a beautiful mountain in the middle of it, that limits the extent to which property can be built in the first place.

Aside from the impact of digital nomads and Airbnb rentals, it's also a city that outperforms many others in the country in terms of things like reliable municipal services and stable water supply, making it very desirable.

Davids uses the term 'superstar city'.

"We see evidence of these superstar cities emerging abroad - these are essentially cities where local property prices become dislocated from what's happening in the rest of the country. Think of your New Yorks, your San Franciscos. your Londons... these are phenomena in housing markets that have have happened over time,and we're dealing with this now for the first time."

Dr Allan Davids, Senior Lecturer: School of Economics - UCT

"I think wat Capetonians are experiencing now is perhaps the price to pay for many years of policy inaction or sluggish policy-making with trespect to things like affordable housing, regulation for things like Airbnb, and essentially trying to play catchup at this point."

Dr Allan Davids, Senior Lecturer: School of Economics - UCT

Based on much of the international experience with this problem, there ARE certain things that can be done to stabilise the housing market so that it can revert back to a price level that's maybe more sustainable for residents, Dr Davids says.

He examines the likely effects of measures like rent control and regulation of Airbnb in detail.

Take a listen in the interview audio at the top of the article.