The ministry wants to enable the housing market to meet growing demand, make available adequate amount of developed land for building houses and enact new laws to help citizens obtain their own houses.

The ministry also aims to improve the ability of citizens to purchase houses, make more homes available at cheaper prices, allow construction of multistory buildings and prevent disorganized residential districts.

Saudi Arabia needs 150,000 housing units annually as demand for residential property is soaring as a result of rapid population growth and an inflow of expatriate workers.

Custodian of the Two Holy Mosques King Abdullah has taken a number of steps to solve the problem. He ordered in March 2011 the construction of 500,000 new housing units in various parts of the country at a total cost of SR250 billion.

“King Abdullah’s decree to build 500,000 houses will have a tremendous impact on the Kingdom’s housing problem,” Muhammad Shaker Al-Dahlawi, an engineer working with the Transport Ministry, told Arab News. He said the royal decree would bring down real estate prices, one of the main problems facing the market.

He pointed out that real estate prices in Makkah have shot up in recent years as a result of the demolition of many buildings around the Grand Mosque as well as evacuation of land for implementing Haramain and Mashair railways. According to a realtor, prices of land in some Makkah areas could double from SR1 million to SR2 million per square meter within six months.

Saudis with low and medium incomes find it difficult to own land. Previously, owning land was a condition to get loans from the Real Estate Development Fund but lately that condition, which had contributed to increasing land prices, has been removed.

Land prices rose 40 times on average between 1973 and the mid-1980s, and 80 times in the main urban areas. The cost of land now accounts for 60 percent of the total cost of a typical home in the Kingdom.

A report carried by Al-Madinah Arabic daily on Sunday said the ministry is also thinking of reducing the space (250 square meters) allocated for building houses. “This will make available more land,” the report said, adding that many poor families who obtained large houses were finding it difficult to manage them.

The ministry is thinking of introducing new financial tools and methods for citizens to obtain necessary funds to build homes. Taking back unutilized land that was given to citizens on grant is another way to create more developed land for housing, the report said.

It also proposed that owners of wasteland should be asked to build properties within a specific time and fined if they fail to follow the rule. The ministry believes that availability of infrastructure facilities would encourage landowners to construct buildings.

Municipalities that develop residential districts will have the right to obtain a good percentage of the cost of developing the land. In the European Union, citizens pay 92 percent of the total cost of property development.