One source claims Saudi Arabia needs 800,000 new homes by 2012. Another suggests the number is closer to 300,000. A third says it is actually one million. The government is predicting a shortage of two million by 2015. So, which estimate is accurate? The answer: it does not matter.
The fact is Saudi Arabia’s residents need homes and they need them now.
A senior manager from one of the world’s top construction and property consultancies told MEED there is a growing discontent among young Saudi nationals. Most of them are tired of the government launching one luxury development after the other, while they live with their parents unable to purchase a home because they do not have an extra $300,000 to pay for it in cash.
There are millions of young upwardly mobile people around the country in the same situation. Almost 49 per cent of the kingdom’s population is aged between 20-34 years of age but to purchase homes, they need long-term financing options such as mortgages.
With a per capita gross domestic product of $14,871, young families and low-income subsectors such as labourers, do not need luxury, they need affordability. Part of the problem, however, is that no developer in Saudi Arabia is prepared to build affordable housing units until a financial framework allows this subsector to pay for it.
Banks are not willing to offer long-term loans or mortgages until the legal framework exists to guarantee debt in the case of a default. All the while, half of Saudi Arabia’s population continues to languish in crowded urban centres.
The message is clear: The population in Saudi Arabia wants homes but they cannot afford to pay for them in cash.
The time is right to end the 10-year wait and pass the mortgage law.