Saudi Arabia Housing Demand was at 99,600 houses in 2021 and is expected to increase by more than 50% to reach 153,000 houses by 2030. That’s according to PwC Middle East which has launched a new report titled Transforming the Housing Sector in Saudi Arabia.
It provides insight on Saudi Arabia’s housing market reform program and identities the major initiatives included in the program and the two main key performance indicators targeted to ensure the program’s successful implementation.
In 2017 more than 1.6 mn Saudi nationals were on the waiting lists for government housing programs. The kingdom has since then developed the ‘Housing Program in 2018 with the objective of increasing access for Saudi families to affordable, quality, safe and well-located housing reaffirming Saudi Arabia’s commitment to addressing challenges including population growth, rapid urbanization an insufficient supply of affordable housing and an unregulated self-build market.
In recent years the Ministry of Municipal and Rural Affairs and Housing (MoMRA) has worked closely with the private sector to facilitate the journey of ownership, incentivize developers and provide housing solutions and products that meet the needs of citizens at competitive and subsidized prices in line with Vision 2030.
Addressing the barriers created by a high mortgage interest rate environment, this critical dimension directly targets the challenge of the unaffordable house through several government-backed initiatives.
Access to sustainable financing solutions remains key with the Saudi Real Estate Refinance Company (SRC) having injected more than SR6.5 bn ($ 1.73bn) by the end of 2020 with plans to refinance 20% of the kingdom’s residential mortgage market by 2025.
Support from the Saudi Central Bank has also played a crucial role in the sector’s growth with minimum down payment requirements for property purchases being reduced from 30% to 5% of the purchase price in addition to increasing the number of banks offering home loans. In addition to improving access to financing the Kingdom has continued to increase the private sector’s involvement, particularly in the development of affordable, quality, safe and well-located housing.
Over the coming decade, the kingdom will need to create approx. 1.2 mn new homes to reach a housing stock of 4.96 mn houses by 2030. The introduction of a new central regulatory entity for real-estate rental and buyers’ market is supported through initiatives such as Ejar that regulate the relationship between all parties the rental process.
Furthermore, the expected development rate of the real estate market offers an opportunity for off-plan transaction growth which would be supported with additional security through initiatives such as the Wafi Programme which regulates off-plan property sales and rental processes and transactions. These initiatives enhance the partnership between the government and private sector to provide solutions and residential products that meets the needs of citizens at an affordable price and digitally enable Saudi homebuyers to apply for their first home online.
