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.

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