The Perverse Effect of Inclusionary Housing Policy on Long-Run Affordability

This think-piece critiques Inclusionary Housing Policies (IHPs) in Cape Town, arguing that while they aim to support the "missing middle," they may unintentionally worsen long-term housing affordability by distorting market dynamics and raising prices for market-rate buyers. The author contrasts IHPs with the filtering effect -a natural process where older housing becomes more affordable over time. He uses local data to show that filtering can produce significantly more affordable units than IHPs, which apply only to a small fraction of new developments. Moreover, the author contends that market-driven mechanisms like filtering may offer more sustainable and equitable solutions than regulatory mandates, even though filtering remains ideologically unpopular in South African policy circles.

Abstract based on original source.