Free housing for the poor has to have a cutoff date, Human Settlements Minister Tokyo Sexwale said in Cape Town on Monday.
The solution to South Africa's backlog of 2.3 million houses was not in providing free homes, he told the International Housing and Home Warranty Conference.
He added however, that now was not the time to "cut off the poor".
"The solution will come not from free housing. There has to be a cutoff date for discussing that. But we can't cut off the poor right now, particularly in the current national economic environment."
The answer to all housing problems lay in having a growing economy, where people had jobs and could access finance.
"We can't sustain what we are doing for a long time."
Sexwale said South Africa, which had around 2500 slums, faced added problems from its growing population of immigrants, from countries such as Nigeria and Zimbabwe.
"We have natural population growth as well as growth because people are coming here."
Another difficulty lay in the provision of social housing. South Africans, Sexwale said, preferred standalone houses with their own gardens, but a shortage of land around cities was making that impossible.
"The challenge is to develop social housing and planning for new towns and cities," he said.
"The challenge is for densification. We are having to go higher and higher and higher. The challenge is quite big."