According to some estimates 50 percent of the total stock of housing units in the Kingdom is occupied by renters, while 41.6 percent by property owners.
Saudi household sizes have been commonly large, thereby accommodating extended families. Although this practice is somewhat still in use today, cultural changes coupled with rising per capita income has caused a desire to shift toward breaking away from the extended family system.
The Saudi housing market continues to expand on the back of high population growth but it is experiencing a demand/supply imbalance and this trend is expected to continue as the supply of houses will lag behind increasing demand.
This has proven to be a complex issue. Clearly, there is need to develop ways to build more affordable houses for the citizens.
This necessitates zoning reviews, cost-effective construction technologies, proper building codes and adequate capital and guarantees for investors.
On the demand side, there should be a concerted effort to facilitate people to own their homes wherever it is found realistic. In some cases, this will necessitate a measure of government support or guarantees.
People should be allowed to build equity over time and sell or realize it if they need to move. Nevertheless, social housing should be considered a limited category to people for whom ownership is found to be unrealistic.
The major government initiatives such as Custodian of the Two Holy Mosques King Abdullah's injection of SR250 billion into the construction of new homes, REDF (Real Estate Development Fund) allowing banks to offer bridge financing and the newly passed mortgage law will stimulate the demand for housing in the medium to long term.
Total housing stock is expected to expand from 4.6 million units in 2010 by 2.4 million units during the next 10 years, with annual demand rising from 195,000 in 2011 to 264,000 units by 2020.
There is no doubt that the lack of affordable housing continues to be a challenging issue, especially the limited ownership of modern homes (villa) by Saudis.
In addition, the artificially created high prices of land plots, which are increasingly sought after in the Kingdom as a long-term investment option by high networth Saudis, are accessibly limited to Saudi citizens and home developers.
Housing Minister Shuwaish Al-Duwaihi’s recent announcement that around 621,000 Saudi nationals have been found eligible to receive housing aid under a new 'ESKAN' scheme will help in easing some pressure on shortage of homes across the Kingdom.
In this context, it will probably make sense to start moving toward the Western concept of a housing ladder where people move between different types of properties as their needs evolve.
This will require awareness building and molding of attitudes. A young couple could start with a small apartment and expand as the family grows. An elderly couple could once again downgrade and realize some of their equity.
It is high time increased seriousness is shown by both authorities and stakeholders to find a solution to the vexed housing issue and meet the need of the citizens for owning a home. Home seekers can thus avoid falling into the trap of owners whose rents continue to show a rising graph year after year, which many can ill-afford.
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