Saudi Arabia’s central bank is launching an “affordable mortgage’’ scheme to fund the purchase of residential real estate by Saudi citizens.

Saudi Arabian Monetary Agency or Sama as the central bank is known has completed coordination with housing and finance ministries to implement the programme, according to a Sama statement. The central bank didn’t give the size of funds to be allocated to the scheme or when the programme will start.

Home buyers will have to pay 15 per cent of the property value as an advance payment, while the lenders will contribute 70 per cent of the amount. The additional 15 per cent would be guaranteed by the Ministry of Finance, Sama said in the statement.

The government decision comes on the heels of Sama’s decision in December to license a national home finance company, Bidaya.

Saudi Arabia, the largest economy is region with a growing population, is facing housing shortage and the state has been encouraging developers to concentrate on that segment of the market. 

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 rental increases due to shortage of housing units.

Under more recent plans, Saudi Arabia intends to spend SR1.5 trillion ($400bn) on building 1.5 million homes for Saudi nationals in the next seven to eight years, the kingdom’s Housing Minister Majed al-Hogail said on 26 January.