South Africa has seen a dramatic decrease in household size over the last decade. In Table 1 we show that over the eight-and-a-half years from October 1995 to March 2004 the average household size has decreased by 20% or 0.74 persons (see also Pirouz 2004). Consequently for a fixed population size there would have been 20% more households in March 2004 than in October 1995. Such a rapid rate of household formation is interesting in and of itself. From the perspective of a policy maker it is particularly vital to understand this process. The new democratic government has committed itself to extending infrastructure and social services to households in deprived communities and now finds that it is trying to catch a moving target. The backlogs are increasing as the services are being rolled out. We will suggest below that there might be a connection between these two processes.