Saudi Arabia’s government has launched a new scheme to provide housing aid to its citizens, in the hope of ending a shortage of homes which has depressed living standards and is politically sensitive for the government.
After social discontent prompted uprisings elsewhere in the Arab world in 2011, King Abdullah announced a plan to build 500,000 homes in Saudi Arabia over several years. Some $67 billion of state funds were earmarked for the plan.
But the programme has been slow to get underway because of sluggish bureaucracies, difficulties in obtaining suitable land and the complexity of allocating aid. The new scheme, named ESKAN – the Arabic word for housing – and launched by the Ministry of Housing last week, aims to break through those bottlenecks.
Saudi families seeking assistance, in the form of state-subsidised home loans or subsidised sales of land or housing units, are being given two months to register on a website. The applications will be considered for three months and the ministry will then announce who is eligible for aid.
Housing minister Shuwaish Al Duwaihi was quoted by local newspapers as saying all citizens who submitted requests through ESKAN and met the conditions would be allocated homes within seven months.
Khaled al Rubaish, a real estate analyst, said the new scheme could help to ease the housing problem by creating a clear, universally applicable mechanism for Saudi families to obtain aid.
“The situation will become clearer for the private sector, real estate developers and financiers, whether banks or mortgage firms. All of these will now know their targets,” he said.
John Sfakianakis, chief investment strategist at Saudi investment firm MASIC, said: “Any step towards finding a solution to the housing challenge is good and very much welcome…It turned out that building 500,000 housing units was more difficult than it seemed, so we need to pick up the pace.”
He added that ESKAN would “help initiate a housing market take-off to tackle the needs of the middle class, where most of the demand lies. Once people see the supply being addressed, there will be fewer concerns about systemic risks and housing market imbalance.”
Analysts estimate that about 60 per cent of Saudi families among the country’s population of about 20 million citizens do not own their own homes, a high ratio for a wealthy country. Rising rents have made it difficult for even middle class people to afford housing; many Saudis do not meet qualifications for housing loans from banks.
It is not clear whether the Ministry of Housing will be able to stick to its timetable for approving ESKAN applications, and how long actual construction of homes will take.
It may be hard to verify that applications are genuine, which could delay the handover of homes, said Abdulwahab Abu Dahesh, a Saudi economist.
Nevertheless, the detailed conditions of the ESKAN scheme suggest the ministry wants to avoid bureaucratic delays by creating a straightforward, transparent system for allocating aid, and this could be a step forward from past programmes.
Applicants must not own a house and have not received aid from a state-subsidised housing programme in the past; applications will be given priority through a points system which takes into account factors such as family size, monthly income and age, and favours the most needy people.
Applicants will pay for their subsidised homes or land, or pay off their loans, in monthly instalments over 10 years through a 25 per cent deduction of their monthly income.