Geordin Hill-Lewis' Gospel: 'Supply-Side Progressivism' in Cape Town

There is something uplifting about cutting away red tape—the frustrating regulations and endless forms that make it difficult to get anything done. I have always imagined plastic red-and-white barrier tape, entangling people, doorways, and offices, not just tidied but finally hacked away. It is a popular fantasy, from Argentinian President Javier Milei’s symbolic chainsaw to Elon Musk’s brutal Department of Government Efficiency in the United States. 

Slashing rules is normally linked to the political ‘right’ who want a smaller government. But it has been revived by those who typically position themselves on the ‘left’ internationally—Ezra Klein in the US, and the Labour Party in the United Kingdom. This movement has a name: ‘supply-side progressivism’. The premise is simple: for everyone to have enough, we need to build and make more of what we need. The problem is that we have made this difficult for ourselves. To make our society fairer, we add more and more rules—affirmative action, environmental assessments, public consultation—and now it is almost impossible to get anything done. The government tries to please too many people but ends up with everyone upset. The remedy is obvious. Government must cut red tape, focus on the basics, and get out of the way.

In South Africa, the idea's most serious advocate is Geordin Hill-Lewis, Cape Town's mayor and newly elected leader of the Democratic Alliance (DA). His instincts are clearest when pressed about the city’s property prices, which have climbed so quickly in recent years as to feature in both local and international media. For Hill-Lewis, the problem is arithmetic. More people want to live in Cape Town than the number of homes available for them. There are now more than 600,000 people eligible for state-subsidised homes. In the last 36 months, more than 100,000 have moved to Cape Town from elsewhere in South Africa. Hill-Lewis puts this in economic terms: “Too much demand is chasing too little supply.” The solution—the “only sustainable” solution—is to build more homes.  

Hill-Lewis is fiercely opposed to what economists call 'demand-side interventions'—attempts to reduce the demand for property. The most common of these is rent control (or ‘rent stabilisation’) which limits how much landlords can increase the rent each year. Cheaper rents mean less profit, which reduces how much each property is worth. While intuitive, international evidence on rent control offers mostly negative reviews. Although property prices decrease, fewer homes are built. It also becomes more difficult for new tenants to find a spot. Once people have a rent-controlled apartment, they rarely leave. 

Much better, then, to build more homes. Partly, Hill-Lewis has done this through more state-subsidised homes—traditionally called ‘RDP’ houses, but since renamed to BNG (‘Breaking New Ground’). Under Hill-Lewis, Cape Town has built more of these homes than any other municipality in South Africa. Even so, the City acknowledges that this is far too few to reduce the backlog—30,000 new homes are needed each year, but the City only builds around 4,000 annually. 

For Hill-Lewis, only the private sector—mostly businesses, but also homeowners—have the money and skills needed to build all the homes we need. The problem is that the City has until now tied them up in regulations. Not only does getting permission from the municipality take several months (and sometimes more than a year), but unhappy neighbours can torpedo new developments by taking the City to court—even if their legal cases are unsuccessful, the delay is often enough to dissuade developers. Activist organisations like Ndifuna Ukwazi have also used public participation processes and the courts to press property developers and the City to ensure that at least some new homes are affordable to low-income families.

Last year, Hill-Lewis tried to address this red tape by passing a key amendment to the City’s by-laws. He describes it as “one of the most meaningful things we will have done in the city.” The reform has made it much easier to build higher-density apartments, mostly by cutting how much permission is needed. Although the by-law only limits these reforms to five small neighbourhoods in Cape Town, Hill-Lewis positions this as a pilot that he hopes to expand. He is loudly enthusiastic about these ideas; when an audience member last month suggested he cut more regulations, he shot back “you’re preaching gospel”. 

For Hill-Lewis, a free market is as much about fairness as it is about practicality. A career politician in the DA, he describes himself as a “natural liberal democrat”, who believes that “property rights are sacrosanct”. Although he repeats across interviews that he is committed to improving the lives of poor Capetonians, he also believes that, ultimately, prices set by the free market are fair.  He dismisses housing activists “who feel they have some kind of permanent entitlement to live in the neighbourhood of their choice, regardless of the cost of it”.

“That's just not how it works in the real world,” he adds, “they must come and live in the 'burbs like the rest of us normal people.” (Prices in Edgemead, where Hill-Lewis lives, have increased by 26% since 2022.) A spirited debater, Hill-Lewis projects a sometimes-abrasive confidence. He has no time for the “simplistic sounding solutions” offered by his critics; “I’m not sure you’ve thought it all the way to the end” he told-off a bemused Dan Corder recently. 

But a closer look at the economics shows the limits not only of Hill-Lewis’ promises, but supply-side progressivism broadly. For all he relies on businesses to build houses, most of these will be unaffordable to most Capetonians. By the City’s own estimates, 61% of new homes needed by 2040 will be needed for households who earn less than R10,000 per month. A further 19% will need to serve households earning between R10,001 and R22,000. The City of Cape Town defines ‘affordable’ housing as within reach of households earning less than R32,000 per month—vastly unaffordable to most Capetonian families. 

Recent developments in Maitland offer more promise, with units for households earning R25,000. Yet this is still more than what 70% of Capetonians can afford. In other words, nearly all new homes needed in Cape Town will need to be state-subsidised. Private developers will only be able to trim the edges. 

Even under the best circumstances, can we build our way out of soaring prices? International studies have considered the relationship between building more houses—an increase in the ‘total stock’—and cost. Estimates vary but are typically small: a 1% increase in housing stock can reduce rents by only between 0.1%, 0.2%, and 0.7%. Cape Town has about 800,000 formal homes. We don’t have definitive data on rent inflation in Cape Town, but it is likely similar to the price of property, which has grown on average by 6.7% each year since 2022—about 2.5 percentage points higher than the national average.  

To merely offset the price rise from last year, Cape Town would need to build between 30,000 and 200,000 houses in a year. But from 2011 to 2022, Cape Town only built an average of 9,700 homes annually. Getting on top of skyward prices would need the city to (optimistically) more than triple annual construction—or, worse, increase it by 1,900%. That’s just to stay apace; to reduce prices, it would need to build even more than this. Perhaps we should just admit this is impossible. We can then either accept high-prices or look for other solutions. 

Much of the argument that we should simply build more relies on a myth. Despite common rhetoric, Cape Town has not been overrun by new residents. From 2011 to 2022, the city’s population grew on average 2.2% each year—placing it third behind Tshwane and Ekurhuleni, neither of which have had the same price hikes. One hundred thousand new migrants in 36 months sounds dazzling, but on this scale, it is relatively small (around 0.7% annual growth). Prices have soared not because too many people want houses, but rather who wants houses in Cape Town—and, vitally, how much they are prepared to pay. 

Hill-Lewis faces a difficult political trade-off. He acknowledges, rightly, that for most of the middle-class, “our home and our pension savings are our two biggest assets in our lives”. And “so it’s important; when the value of those things rise, then we are getting more well off”. But there is a bind here. You cannot make homes more affordable without making them cheaper—without making them worth less. To make it easier for less wealthy residents to buy property, current property owners will need to become poorer. 

Even so, Hill-Lewis is not immune to political trade-offs. His frustration with middle-class Capetonians’ resistance to his policies is visible; he complains that “most of the [legal] cases” that he is involved in are from residents from “higher-end neighbourhoods”. He has sometimes buckled to this pressure, even before legal pressure; in at least three cases, he has vetoed the provision of social housing in wealthy neighbourhoods after residents complained. But he has also shown he is willing to upset middle-class homeowners by sharply raising property rates. In an interview with Sizwe Mpofu-Walsh, he described this proudly as “the most redistributive tax system in the country” as these funds were used to cross-subsidise basic services in poorer parts of the city. These rates seem especially unpopular with the suburbs where the DA has the most support. At times, Hill-Lewis comes across as a man bucking against his party. 

Cape Town has always been the DA’s audition to lead the country. Hill-Lewis’ vision is national: when asked for his prescription for South Africa, he wants to “deregulate the economy dramatically” and “take [essential services] out of the hands of the state as much as possible”. Under his current strategy for Cape Town— worry less about state subsidies; don’t interfere with prices or profits; rely on businesses and homeowners to build more—property prices will continue to rise and the queue for affordable homes will grow. What this means for South Africa will depend on whether Hill-Lewis can question his own gospel.

* Dr David Jeffery is a senior researcher for the ANC in the National Assembly. 

** The views expressed do not necessarily reflect the views of IOL or Independent Media.