As the kingdom is facing a housing shortage in the next five years, the government is trying to implement some mitigation steps. Saudi Arabia's Housing Ministry is planning to create its own development company that will offer mortgage-guarantee fund to boost housing development in the country and attract foreign investors.
As reported by Bloomberg, Minister Majed Al Hogail said that with this, it hopes to encourage banks to increase lending, as well as to boost productivity of local developers. At the same time, it wants to attract foreign developers and teaming consultants and builders. In the long term, the Housing Ministry aims to act as a regulator to balance the supply and demand in the real estate industry without directly developing.
According to the report, the country's population is growing rapidly that in the next five years, there will be 1.5 million homes shortage. Because of the lack of lending and construction, young families also find it difficult to own a home they can afford. One of the first steps already taken was imposing tax on urban land that its owner left undeveloped. Saudi aims to be able to do what helped Dubai turn a desert land into a metropolis.
Meanwhile, a recent MarketWatch report revealed that at this rate, Saudi Arabia actually has more affordable housing, relative to income, than the United States. Real estate website Movoto looked into home prices globally using average mortgage rates as a percentage of average income.
The study showed that Saudi Arabia is the cheapest at 20.47 percent, followed by the U.S. with 24.74 percent and Oman with 28.19 percent. Completing the top five are South Africa at 37.17 percent and Puerto Rico at 37.61 percent. The most expensive city relative to income, per the study, is Ghana at 737 percent. Belarus is trailing behind at 721 percent followed by Ukraine at 612 percent.
