Selecting Spaces, Classifying People: The Financialization of Housing in the South African City

ABSTRACT

Focusing on Cape Town, this article investigates how financialization unfolds in the South African housing market. I use a mixed method that combines in-depth field research conducted among key market players with an analysis of georeferenced residential transactions. Connecting financial and urban geography, the article retraces the institutional and social anatomy of financialization. I demonstrate how financialization unfolds in metropolitan areas through the classification of people and the selection of spaces, by staying away from the urban poor, and instead incorporating the middle- and upper-income sections of society. In that regard, the article unpacks the urban and class structures of housing financialization in South Africa, which challenges narratives from the urban Global North. Two market segments drive financialization in South Africa: the rental market, which became a new financial frontier with the emergence of corporate landlords; and the owner-occupied market, with the rise of the mortgage industry and the limited implementation of securitization, underpinned by highly restrictive lending practices. In both segments, financial institutions and corporate landlords rely on credit scoring to classify and select tenants or mortgage beneficiaries; they target specific areas within the post-apartheid city to develop residential portfolios and allocate mortgages.

KEYWORDS:

• financialization
• South Africa
• credit scoring
• mortgages
• rental
• market

Acknowledgments

I’m grateful to Manuel Aalbers, Marieke Krijnen, and Raquel Rolnik for their advice and comments on the initial version of this article, and to the City of Cape Town for providing the Deeds Data. I’m also indebted to Zac Taylor and the three anonymous referees for valuable comments and criticisms on earlier versions. The usual disclaimer applies.

Disclosure Statement

No potential conflict of interest was reported by the author.

Additional information

Funding

This work was supported by the Ministère de l’Enseignement Supérieur, de la Recherche et de l’Innovation [PhD scholarship]; and the French Institute of South Africa [Research Grant].

Notes on contributors

Julien Migozzi

Julien Migozzi is a lecturer in geography at the Ecole Normale Supérieure, Paris. His research focuses on housing markets and social stratification in emerging cities. He combines computational and spatial analysis with in-depth field work, based on interviews and participant-observation.