The Ministry of Housing received significant attention within the National Transformation Program when 21 initiatives were approved at a total cost exceeding (59) billion riyals, while the combined cost of all initiatives (268) billion riyals, meaning that the Ministry of Housing’s share is more than 22% of the total costs borne by the government to implement all initiatives included in the National Transformation Program, which places the costs of housing initiatives at the forefront.
Based on these figures, real estate sector experts believe the government has shown a greater desire than ever before to resolve the housing crisis, citing the growth in the value of mortgage loans during the first quarter of this year (2016), when they reached approximately 106.3 billion riyals—an increase of 11%—compared to approximately 95.6 billion riyals during the same period last year.Mortgage loans have long been a major obstacle to resolving the housing crisis in the Kingdom.
In this context, Ajlan Al-Ajlan, the winner of the Riyadh Chamber of Commerce elections and a real estate investor, believes that the reintroduction of mortgage loans in the Kingdom will have a significant impact on resolving the housing crisis, noting that these loans have been an obstacle for many citizens who were eager to build their own homes but were unable to obtain the necessary and sufficient mortgage loans to complete their housing projects.
Al-Ajlan referred to the latest report from the Saudi Arabian Monetary Authority, which showed that consumer loans had risen by 6 percent by the end of the first quarter of 2016, This percentage is somewhat significant and includes mortgage loans, which have been reclassified as “real estate renovation, improvement, and furnishing” without any significant changes to their value.
Al-Ajlan called for directing real estate loans toward projects involving the purchase of land, construction on it, and increasing building heights, which would provide more than one housing unit for Saudi families and their children in the future, This is preferable to directing these loans toward the purchase of a ready-built unit, which would suffice for only a single family.
Al-Ajlan emphasized the need to raise awareness about the mortgage programs available in the market, noting that he has observed a significant number of citizens who are unaware of the process for obtaining mortgages, citing that many citizens are unaware of the terms, benefits, or drawbacks of the accelerated loan—which is expected to be approved within days— and that many are unaware that the interest rate on the accelerated loan is 1%, payable in installments after the loan is repaid.”
