JEDDAH: Experts in the real estate and land sector expect the prices of vacant plots of land to decline by 50 percent once the decision to collect land fees on vacant parcels comes into force.

Riyadh Al-Mustafa, a former member of the municipal council of Qatif, demanded quick action to solve the problem of housing, considering it as a factor in the daily living equation of citizens, and stressed the importance of both the private and public sectors working together to overcome this crisis.

Al-Mustafa said a report of the Ministry of Housing estimated the demand for houses across the Kingdom until 2020 to amount to 2.5 million units. He said the annual demand for houses stands at between 200,000 and 227,000 units.

“The gap between supply and demand of housing units is estimated at 530,000 units. The Housing Index Multiplier of a house price in comparison to the annual per capita income ranges from 10 to 15 times, a very high proportion, and double that of Britain and the United States,” he explained.

He attributed the causes of reduced supply and increased demand to the high population, especially youths, and the decreased number of extended families in addition to the concentration of population in cities where jobs are more available.

“The other reasons involve the few sources of mortgage financing, the absence of legislation and procedures and the higher prices of construction and land,” he added, noting that landowners use land as an investment, keeping them vacant for several years before selling for profit.

He said that 70 percent of vacant land can be used for housing.

“But there are social and economic obstacles to planning. Most structural plans omitted many parameters, the most important of which is the future expansion area from large areas of land owned by Aramco” he said.

Abdullah bin Ahmed Maghlouth, a member of the Saudi Economic Association, said that prices recorded substantial inflation, exceeding 70 percent.

“Once the fee system on vacant land is enforced, the current high price levels will decline,” he predicted. He expected the fee system to reduce land prices by 50 percent.