Saudi Arabia to see up to $21bn investment in housing this year

Saudi Arabia’s Ministry of Housing wants 60 percent of Saudis to own homes by 2020. Above, a newly-constructed residential area in Dammam. (Shutterstock)
Updated 08 March 2019

Saudi Arabia to see up to $21bn investment in housing this year

  • Home ownership growing 6-7% annually, says Minister of Housing Majed Al-Hogail
  • Minister hopes to raise home ownership to 15,000 new households per month by 2020

RIYADH: Saudi Arabia’s housing minister said on Wednesday he expects investments in the real estate financing sector to reach between SR60 billion and SR80 billion ($21.33 billion) in 2019.

Real estate financing for January hit SR4.7 billion, and coming months were expected to see even bigger figures, Majed Al-Hogail told Reuters on the sidelines of a housing conference in Riyadh.

The ministry wants 60 percent of Saudis to own homes by 2020. It is working with local banks to facilitate financing and help developers increase the supply of affordable units.

The private sector is now financing 100 percent of housing market needs, up from 35 percent previously, the minister said on stage at the conference. He said banks provide 93 percent of real estate financing, with real estate financing firms covering the rest.

Saudi home ownership is growing between 6 and 7 percent annually, Al-Hogail said.

He also said he hopes to raise home ownership to 15,000 new households per month by 2020, from a little over 10,000 per month now.

“The average supply of housing units in the Saudi real estate market is between 350 to 375 thousand units across the Kingdom,” he told Reuters. Ninety thousand families access the market yearly, he said, and the government hopes to raise the percentage of home ownership by 7 percent annually.

The Saudi government wants to increase activity in the real estate market as it moves to revitalize the economy, and is taking steps to reform the sector as part of its Vision 2030 strategic plan.

Japan’s households tighten purse strings as sales tax and typhoon hit

Updated 06 December 2019

Japan’s households tighten purse strings as sales tax and typhoon hit

  • Falls in factory output, jobs and retail add to fears of worsening slowdown after Tokyo unveils $122bn stimulus package

TOKYO: Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1 percent in October from a year earlier, government data showed on Friday.

It is the first fall in household spending in 11 months and the biggest fall since March 2016 when spending fell by 5.3 percent. It was also weaker than the median forecast for a 3 percent decline.

That marked a sharp reversal from the 9.5 percent jump in September, the fastest growth on record as consumers rushed to buy goods before the Oct. 1 sales tax hike from 8 percent to 10 percent.

“Not only is the sales tax hike hurting consumer spending but impacts from the typhoon also accelerated the decline in the spending,” said Taro Saito, executive research fellow at NLI Research Institute.

“We expect the economy overall and consumer spending will contract in the current quarter and then moderately pick up January-March, but such recovery won't be strong enough.”

Household spending fell by 4.6 percent in April 2014 when Japan last raised the sales tax to 8 percent from 5 percent. It took more than a year for the sector to return to growth.

Compared with the previous month, household spending fell 11.5 percent in October, the fastest drop since April 2014, a faster decline than the median 9.8 percent forecast.

Analysts said a powerful typhoon in October, which lashed swathes of Japan with heavy rain, also played a factor in the downbeat data. Some shops and restaurants closed during the storm and consumers stayed home.

Separate data also showed the weak state of the economy.

The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, fell a preliminary 5.6 points to 94.8 in October from the previous month, the lowest reading since February 2013, the Cabinet Office said on Friday.

It was also the fastest pace of decline since March 2011, according to the data.

Real wages adjusted for inflation, meanwhile, edged up for a second straight month in October, but the higher levy and weak global economy raise worries about the prospect for consumer spending and the overall economy.

While the government has sought to offset the hit to consumers through vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Japan unveiled a $122 billion fiscal package on Thursday to support stalling growth and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.

A recent spate of weak data, such as exports and factory output, have raised worries about the risk of a sharper-than-expected slowdown. The economy grew by an annualized 0.2 percent in the third quarter, the weakest pace in a year.

Analysts expect the economy to shrink in the current quarter due to the sales tax hike.