Saudi Arabia’s Ministry of Housing has said the kingdom requires 3 million housing units by 2025 in order to manage the current housing shortage in urban areas.

The kingdom will need to deliver 330,000 units a year in order to reach its target.

Early in 2015 King Salman bin Abdulaziz made an additional SR20bn ($5.3bn) available under a royal decree, as part of a plan to boost the real estate market and bring down prices by 20 per cent.

The decree would ensure provision of infrastructure facilities for housing units, providing electricity and water facilities. The SR20bn bonus would enable citizens to construct housing units in vacant plots received from the government. According to the royal decree, SR14bn will be given to provide electricity connections to new housing units and SR6bn to provide water connections.

According to government statistics, there are currently 750,000 families eligible for public housing. Despite a $67bn plan in 2011 to build 500,000 homes over several years, Saudi Arabia’s poorer citizens have suffered from rising rental prices in cities such as Riyadh and Jeddah.

In November Saudi Arabia’s cabinet said it will impose an annual 2.5 per cent fee on undeveloped urban land designated for residential or commercial use.

The tax will be imposed as a percentage of the land’s value, in line with earlier recommendations from the kingdom’s advisory Shura Council. Full regulations will be published within 180 days.

The money will be collected in an account at the central bank and used to fund housing projects and other public services, according to the Saudi Press Agency (SPA).