Government policy towards informal settlements in south africa reflects a tension between two approaches: recognizing the legitimacy of informal settlements and aggressively removing these so-called “slums”.(1) drawing on nationally representative household survey data and interviews with 25 individuals relocated from an informal settlement to a “transit camp”, this paper argues that more detailed attention should be paid to the changing connection between housing, household formation and work. Whereas cities in the apartheid era were marked by relatively stable industrial labour and racially segregated family housing, today the location and nature of informal dwellings are consistent with two important trends: demographic shifts, including towards smaller more numerous households, and employment shifts, including a move from permanent to casual and from formal to informal work. This study is therefore able to substantiate in more detail a longstanding insistence by informal settlement residents that they live where they do for reasons vital to their everyday survival. The paper also highlights the limitations of relocations not only to urban peripheries but also to other parts of cities, and it underscores the importance of upgrading informal settlements through in situ development.