The statement by the economists came ahead of a debate in the Shoura Council on passing a bill on the issue. According to the economists, employees should be given either a three-month salary or a lump sum amount of SR40,000 as annual housing allowance.
The move is significant as house rents across the Kingdom have soared by 50 percent in recent years and nearly 70 percent of government workers do not own a house and live in rented apartments. This situation coupled with a rising population has also increased the demand for housing units.
“Measures should have been taken to provide housing allowance to government employees a long time ago,” professor Abdulelah Saaty, dean of the College of Business in Rabigh, told Arab News.
He hoped the consultative body would pass the bill without further delay. He also pointed out that Saudi Arabian Airlines, which is a public organization, has been paying housing allowance to its employees.
Abdul Rahman Al-Zamil, a businessman and former member of the Shoura, proposed the payment of a lump sum amount of SR40,000 to all employees who do not have their own house.
“This is good for employees who receive low salaries and find it difficult to pay house rents. A three-month salary will not be enough for people on low salaries to pay their rents,” he said in comments published in Al-Eqtisadiah business daily.
He said employees could also make use of the amount to own a house gradually. Al-Zamil believes that the new bill if passed would not increase house rent levels further because they have already witnessed big hikes in the past.
He also called for the quick implementation of the 500,000-unit housing project ordered by Custodian of the Two Holy Mosques King Abdullah at a cost of SR250 billion to meet the housing shortage.
“Since most ministries and government departments possess their own land, they can establish housing units there for their employees under the supervision of the Housing Ministry,” Al-Zamil suggested.
“The approval of the housing allowance will not affect the state budget in view of the growing oil prices, unless it falls below $60 per barrel,” pointed out economist Muhammad Al-Amran.
He emphasized the need for fixing a minimum amount taking into account current house rent levels, and setting an upper limit of SR60,000. Al-Amran said rent costs have put a heavy burden on most citizens, especially those on low salaries. For some employees, rent accounts for about 40 percent of their annual salary.
Professor Adnan Al-Shaikha of King Saud University emphasized the need for a comprehensive approach to solve the country’s housing problem. “Housing allowance alone will not solve the problem. It may exacerbate the problem because it would boost demand while supply remains the same,” he said. He called for constructing housing units with the involvement of all government departments like SABIC, Aramco and universities. “The increase in supply will definitely reduce prices,” he added.
Al-Shaikha said rising real estate prices have increased the cost of building houses. “At present the cost of land accounts for half the total cost of a house project whereas in the past it was 20 percent. So, another solution of the problem will be making the land available for housing at reasonable rates,” he said. “This can be done through municipalities developing the land which they allocate for building houses. In a vast country like Saudi Arabia, land should not be a problem.”
