Saudi Arabia has announced plans to spend SR120 billion ($32 billion) on subsidized home loans for borrowers in a bid to expand the private sector role in the Kingdom's housing market.
The program includes SR18 billion loan-guarantee system to boost access to funding, as well as SR12.5 billion to support home down-payments to be spent through to 2030, Housing Minister Majed Alhogail said in an interview with Bloomberg.
Saudi authorities are looking to expand the mortgage market by 70 percent to reach SR502 billion. Currently, the Saudi government provides 65 percent of home loans.
- Saudi Vision 2030: Breakdown of the Sweeping Reforms
- Saudi Arabia Unveils $500 Billion Mega City on Border With Jordan, Egypt
“We want to change that completely,” Alhogail told Bloomberg. “It’s a very generous program. It’s enabling the private sector, reducing their risk to a certain level.”
The new funding is part of a push to lift home ownership among Saudi citizens from 50 percent to 60 percent by 2020.
The new housing policy is part of Prince Mohammed bin Salman’s Vision 2030 for economic transformation in Saudi Arabia.
The Saudi Arabian government will monitor conditions and adjust policies “to ensure there is no bubble” in the housing market, Alhogail said.
“As you know, when you launch a very strong program like this, you expect the price could increase,” he said. “You could expect more defaults, because you are lending to people who don’t have steady income.”
The kingdom is aiming to build 125,000 housing units in 2018, compared to 110,000 last year. Most of the new units will cost between SR250,000 to SR750,000, Alhogail noted.
Copyright: Arab News © 2020 All rights reserved.