JEDDAH, 7 November 2004 — Many young Saudis who work hard and are developing careers are finding that their dreams of owning nice homes and starting families of their own have been put on hold as rising property prices far outpace salary growth.
“I work in a private company for SR5,600 a month. With a salary like this, there is no way that I can afford to buy a house in Jeddah,” said Abdul Aziz Al-Marwani, a 29-year-old private sector employee. “If I want to buy a house, a duplex or an apartment, I have to choose a good neighborhood with full services without problems like groundwater, bad roads or bad sewers.”
It’s a frustrating situation for Al-Marwani.
“There is a big boom in Jeddah in terms of houses and apartments,” he said. “I see duplexes built in north of Jeddah in Muhamadeya, Al-Nahda neighborhood and in east of Jeddah. I see apartments for sale everywhere with good designs. The prices are too much for an average Saudi these days. Tell me how can I afford to buy a house for over a million riyals or a duplex for not less than SR800,000 when my salary is only SR5,600? A bank would refuse to give me a loan because my salary cannot cover such an amount. Getting married is a problem because I cannot get a place for myself.”
Finding the right house should be a thrilling experience, but many young people househunting come away from the experience dissatisfied and discouraged.
“When I first decided to buy a house, I had three choices: Either to buy a villa, a duplex or an apartment,” said Abdul Rahim Ahmad. “When I looked at villas, I found they cost SR1.2 million and above, which is very expensive, and my SR8,000 monthly salary couldn’t cover it even with a 50-year loan.”
Even bank loans can’t change the realities affecting young, would-be homeowners. The young people are priced out of the marketplace to begin with.
“When I looked at duplexes, they were a bit cheaper, from SR750,000 to SR900,000. My poor salary also cannot afford such a large amount of money,” Ahmad said. “I thought of turning to a bank to buy a house, but it is like replacing a problem with a bigger problem, he said. “When I considered owning an apartment, I hesitated because there is no clear system as to what exactly happens when the entire apartment is sold in the building, is the owner of the building going to fix problems if problems arise? Besides that the price of an apartment ranges from SR400,000 to SR600,000 for five-, six- or seven-bedroom units. If I decided to buy an apartment, it would mean that I would spend 30 years paying for it. It is something that most average Saudis, including me, cannot do.”
What it means for some young people is an extended stay at their parents’ homes.
“There is no way that I would own a house without my family’s help,” said Ibrahim Al-Ahmadi. “Let’s be honest, average Saudis these days cannot afford houses and those who take the risk and buy houses through the bank or installment payment live in long-term fear of perhaps failing to pay the full amount. If my salary was SR12,000 per month, do you think that I could afford a house in addition to a car, bills, necessities and children? Expenses grow as the family grows. Houses in Jeddah are not getting any cheaper. They are very expensive for an average middle-income young Saudi looking to start a family. How can you start a family without a house?”
Some parents plan for their grown children to stay at home longer than what would have been considered usual in the past.
“I live with my father because I must admit that I cannot afford to buy a house or rent an apartment,” said Salah Omar, a 31-year-old Saudi man. “If I want to buy a house, I’ll have to get help from family. My father realized that buying houses would become a big problem. That is why he built a third level on his house for me to live in.”
The disparity between income and housing prices seems to be a fact of life.
“To be honest with you, prices are crazy out there,” Omar said. “Normally, if prices go up, then salaries should also go up. This is not the case here. We see prices increase dramatically and our salary, if it ever increases, increases modestly. If I was going to buy a house, I wouldn’t buy it now despite the boom. I would wait until prices go down to an affordable level. I wish that all Saudis would do the same and forget about buying anything at this time because that would force these greedy real estate businessmen to lower their prices.”
Other young Saudis say that the government should step in to somehow resolve the problem.
“In the past, the easiest thing for most Saudis was to find a good house because the economy and salaries were good,” said Abdul Karim Al-Raddadi, a 35-year-old man from Madinah. “The current generation, including me, cannot afford to buy a house. If I wanted to buy a house, I’d have to depend on a source of income other than my salary, such as a business. But starting a business is a headache and a risk that someone should take. As an average Saudi with a family, I did not buy a house because it would be very expensive, and I could not afford it. I have two daughters and three sons. Buying a house would mean that I’d have to cut down on their expenses and use their money to spend on a house. Most Saudis, especially in the private sector, cannot afford houses because there is no job security. My question is: Who is setting up the prices? Why can’t the government intervene to prevent businessmen from jacking up the prices?”
It prompts some young Saudis to raise questions about the Kingdom’s economy.
“The future is dark,” said Talal Nasser, a 28-year-old Saudi. “It is a scary thought to know that average Saudis cannot afford to buy a house in Jeddah. How could most of Saudis afford to buy a house when half of them are unemployed and the other half are underpaid in an expensive city?
“Before you ask how many Saudis can afford to buy a house, see how many can afford to buy a decent new car? For me, renting is an ugly solution, but it is a solution that I can afford,” Nasser said. “I wish I could buy a house through installment payments because at least the money I paid would go to something that I would own in the future. Jeddah is expanding very fast to the north. I am surprised that despite the growing number of houses and apartment buildings, prices are still too high for average Saudis to afford.”
