Housing Minister Majed Al-Hogail confirmed the ministry’s policy of guaranteeing a down payment of 15% or offering affordable mortgages to those who lack the financial means,” Al-Hogail noted that the Ministry, in cooperation with the Saudi Refinancing Company (SRK), is working to invest in sukuk to grow and develop real estate financing, adding that the Kingdom has the lowest default rate on financing globally, though he expects this rate to increase as the program targets a larger number of citizens.
Al-Hogail noted that the real estate finance market grew by 29% during 2017, explaining that agreements have been signed with a number of real estate developers both inside and outside the Kingdom, as the Ministry is keen to ensure that citizens have the freedom to choose their real estate developer; noting that the momentum in real estate financing continued in 2018, growing by 1.98% year-on-year in January 2018.
Al-Hogail said, during his participation in the Real Estate Development Fund conference held yesterday in Riyadh, that the Ministry of Housing hopes to introduce monthly payments for home rent instead of the previous system, to make it easier for citizens. He noted that the default rate across all housing products is 1.7%, which is the lowest globally, and we expect this rate to rise among those without a steady income, and therefore there is a committee from the Ministry to monitor this, and we will work to support those in default outside the framework of the relationship between the owner and the financier. He added that through the housing program, the Ministry has established a committee involving a number of specialized agencies to monitor defaults more closely and develop appropriate solutions.
Al-Hogail revealed that the Ministry is currently working to study new financing policies for the coming phase to revitalize cities abandoned by Saudis, or through other financing policies to renovate homes there, noting that the off-plan sales rate stands at 31% and we are currently working to raise it to 50%. He indicated that the government may need to purchase land to implement various policies, explaining that the Ministry has a policy to provide additional liquidity to the market through the Refinancing Company by injecting liquidity via the purchase of portfolios ranging from 50 to 69 billion riyals during 2020.
Al-Hogail confirmed that the Ministry aims to increase the volume of real estate financing to 502 billion riyals by 2020 from the current 290 billion, noting that there are currently 6.5 million housing units in the Kingdom valued at 2.5 trillion riyals.
He added that work is underway to facilitate access to financing so that Saudi citizens’ chances of obtaining it increase fivefold compared to the past, and that the government aims to boost activity in the real estate market as it seeks to revitalize the economy and is taking steps to reform the sector as part of the Kingdom’s Vision 2030.
