ABSTRACT The intersections between post-apartheid state policy and the expressed experiences of residents of an ex-coloured area (Retreat) and a predominantly African informal settlement (Imizamo Yethu) in Cape Town are presented. Three conclusions about post-apartheid Cape Town emerge. The impact of state policy is uneven, both between and within the individual communities. Although social divisions are created by past and present housing policies, the real threat to the urban populations of Imizamo Yethu and Retreat is economic. Finally, government's intentions of integrating racially divided South African cities seem likely to fail, at least in the less affluent quarters of Cape Town. Thus a racialised legacy, which post-apartheid state interventions barely ameliorate, underscores the significance of cultural networks as mediating mechanisms for survival among the urban disadvantaged. Post-apartheid polarizations are generating new sub-urban identities.