The report of the Article 4 consultations issued by the International Monetary Fund on the Saudi housing sector expected the continuation of the strong growth of residential real estate lending in the Kingdom in light of government programs that support demand growth and enhance supply in the sector.
The report praised the role of government programs and regulations to improve the regulatory environment in increasing the ownership rate to 62% and increasing the housing supply to 334,000 housing units in 2020, and finding digital solutions to accelerate the mechanism of housing entitlement.
The Fund’s report noted the efforts of the “sakani” program to increase the number of housing options and various financing solutions, and to provide 266,000 housing loans and free lands during 2020, pointing out that the program enabled beneficiaries of Saudi families to obtain subsidized real estate loans of up to 500,000 Saudi riyals with subsidy. Profit payments due to the lender, and “sakani” determines the support according to income and the number of family members, in addition to providing a program for real estate finance guarantees for families with lower incomes. The report can be viewed by visiting the link https://www.imf.org/ar/Whats-New -Archive.
The report indicated that the value of residential real estate financing increased by 84% in the year 2020 to reach 136 billion riyals, noting that loans supported by government housing programs accounted for 96% of this value, and real estate lending continues to grow at a rapid pace in light of government programs that support demand and supply in The housing sector, and the volume of real estate loans doubled during the past two years to about 18% of the total bank credit.
The report drew attention to the stability of real estate prices in 2020 after their sharp decline during the period from 2015 to 2019, and the improvement of the regulatory environment for the housing market by accelerating many procedures, including the building permits mechanism and exempting the first housing from real estate tax from October 2020, with no more than one million Saudi riyals from the purchase price, which contributed to the increase in the proportion of Saudi household ownership of homes from 47% in 2016 to exceed 62% by the end of 2020.
The report reviewed the growth of the supply of residential real estate and the availability of real estate development companies about 344 thousand new housing units during 2020, an increase of 4.1% compared to 2019, and 30% of these units were provided through the government program “Sharakat” in cooperation with the private sector. And the “Etmam” platform for real estate developers.
The report touched on the role of digital solutions provided by the “sakani” application for smartphones in enhancing the efficiency of the residential real estate market by accelerating the mechanism for verifying the fulfillment of eligibility conditions and submitting applications, and facilitating obtaining appropriate financing solutions, in addition to the implementation of the “Ejar” program and the solutions it provides. Digitalization in the rental market to increase transparency and efficiency by standardizing electronic lease contracts, establishing a regulatory framework for real estate brokerage firms, and linking landlords with tenants through a digital platform.