After about a decade in the making, Saudi Arabia’s mortgage law is finally approaching completion, but will not be the panacea needed for the kingdom’s looming housing crisis.

Analysts say that by as soon as 2018 the gap between supply and demand for housing will reach crisis point, heaping yet more social pressure onto a society already struggling to cope with high unemployment and political repression.

Only about half of all Saudi families are thought to own their home, largely because poorer citizens cannot afford it. This has led to developers not bothering to build for middle and low income families, leading to a shortage of housing stock for this market segment, and rapid increases in rents that squeeze them further.

Policymakers had hoped the mortgage law would help shift developers away from a focus on luxury villas to developing the kind of affordable housing so desperately needed. At the same time, it would liberalise the funding of home purchases. This would throw open the doors for the establishment of a raft of new companies specialising in mortgages, while also giving lenders the legal guarantees they could repossess assets in the event of default.

In the absence of this law banks had concentrated their lending on personal loans, which are often used to fund house purchases. Banks say the main impediment to them doing more loans of this type has not been a lack of appetite on their part, but a lack of suitable homes for their customers to buy. Most bank lending is currently focused on the affluent and fails to benefit the young who need it most.

While the mortgage law should provide a solution to many of the hurdles that stymy the housing sector, it is unlikely to provide the depth or speed of structural change required to really address the problem.