Saudi Arabia’s housing ministry has set a target for the mortgage market to reach a total value of 502 billion riyals ($134 billion) by 2020 from a current 290 billion riyals ($77.3 billion), according to a report in Reuters which cited the Kingdom’s minister of housing Majed al-Hogail.
That goal can be reached through new efforts by the Saudi government to jolt the mortgage industry to life in the Kingdom for middle-class buyers, the government believes. Since 2015, the government has taken several measures to reform the housing and real estate sector and make it easier for Saudis to purchase homes.
In February, Bloomberg reported that Saudi Arabia plans to spend 120 billion riyals ($32 billion) on subsidized home loans for borrowers to create conditions for an expanded private-sector role in a mortgage market dominated by the government.
The government aims to raise household ownership ratio to 70 percent by 2030, which would mean additional 1.2 million housing units, according to the report.
47 percent of Saudi families already own their homes, but the Kingdom “aims to increase this rate by five percentage points by 2020,” the government says. “This would be a substantial achievement given the high increase in the number of new entrants to the housing market. We will meet this target by introducing a number of laws and regulations; encouraging the private sector to build houses; and providing funding, mortgage solutions and ownership schemes that meet the needs of our citizens,” according to the Vision 2030 social and economic reform plan.
According to the Reuters report, the size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada.