JEDDAH: DIANA AL-JASSEM
Published — Thursday 7 February 2013
Last update 9 February 2013 12:21 pm
The Population Statistic Center at King Saud University (KSU) in Riyadh recently published a study that shows that 52 percent of Saudis who live in Riyadh do not own their houses.
The overall rate of Saudis who own homes in the Kingdom was estimated at 60 percent, while 35 percent of Saudis live in rented houses. The remaining 5 percent gets their housing provided by their employers.
In small cities and villages, like Baha, Jazan, Abha, Jubail, more Saudis tend to own a house, due to their high purchasing power and social traditions.
Arab News spoke to a number of experts and real-estate contractors who confirmed that the continuous growth of the population, a lagging supply of residential real estate, and unemployment weakened the Saudi desire to purchase real estate.
John Harries, director of real estate specialist Jones Lang LaSalle in Riyadh, called the low rate of house owners in Riyadh “surprising, when comparing Saudi Arabia to European countries.”
In the US and the UK, on the other hand, the rate of house owners is lower than the rate in Riyadh, he said. “The main reason that Saudis are unable to buy their own houses is the continuously increasing demand for real estate and the lagging supply. Because of this, prices go up beyond the reach of many potential buyers.”
The rate of unemployment and the average salary that Saudis earn who are employed are leading to a reduced rate of house owners.
Harries pointed out that the introduction of a mortgage law, that would enable Saudis to borrow money to pay for a house, could contribute to increased ownership.
“When we look at the UK, the US and Europe, we found that mortgage laws and bank loans help individuals to buy houses. In Saudi Arabia, real estate funding is still limited. Hopefully, the introduction of a mortgage law would help in solving the housing problem,” he said.
According to the university’s research, social traditions in Saudi villages and small cities give a high priority to property ownership.
Rajallah Al-Ghamdi, a sociologist, explained that in rural areas it is a tradition for Saudi men to buy a house as soon as he gets married.
“Most families in small villages don’t accept the marriage unless they have made sure that the groom owns a house,” he said. Khalid Al-Marei, a real state contractor in Riyadh, said that most families in Riyadh prefer to rent apartments, due to the high rent of villas, and double-floor villas. “The demographic map of Saudi Arabia led to having large number of villas in Riyadh and lower number of apartments. Not all families are able to rent villas, which is why they prefer apartments. Some will rent a dwelling in one of the slums,” he said.
According to the KSU study, a quarter of Riyadh’s population live in villas and 13 percent lives in the double-floor villas. Another 37 percent lives in apartments, while 11 percent lives in underdeveloped areas or slums.
A recent article in Arab News said that even though Saudi banks, the Human Resource Development Fund (HRDF), and the Ministry of Housing are offering flexible loans, Saudis are still not interested in getting real-estate debts.
“I wonder why Saudis are ignoring such a great opportunity. Banks are presenting several programs that enable each individual to own a house, but Saudis still ignore these programs,” said Fadhl Albu Ainain, a Saudi banker.
Some companies help their employees by giving them houses to live in and cut the house installments from their monthly salary. At the end of the day, the employee owns that house.
This system is used in the US and its also used in large Saudi companies in Jubail, and Dammam. According to the statistics, Jubail companies provide 17 percent of housing for their employees. Companies in the Eastern Province and Tabuk Province ranked second by each providing housing to 12 percent of the population there.