Abdulaziz Alkhodir
Professor Bieber
English 113B
30 October 2012
Home Ownership in Saudi Arabia
Looking for home is one of the hardest job people face in their life, whether they are rich
People or poor people. Because wealthy people have a lot of money they do not find what
exactly they want, so they still look for the best . On the other hand, some of poor people
cannot even pay for one room rent, and that is really harsh. Home ownership is one of the most
important issues that people talk about in their daily life in every country, including Saudi
Arabia. Although Saudi Arabia has one of the strongest income in the world, most of Saudi
people have some difficulties having a home. I believe that to get rid of this Problem, Saudi
government should rise their employee’s income, impose fees on the vacant lands and active
mortgages.
Unfortunately, the salary for the Saudi person is not fair enough comparing with other
countries that have as much budget as we do. When we talk about salary, we are talking about
two main categories, people who work for the government and people who work in private
companies that belong to some merchants. Although people who work for the government get
higher salary than people who work for private companies, it is still not enough. The private
sector in Saudi Arabia prefers to hire foreign workers than Saudi workers because of two reason.
First reason is, they say that foreigners workers are more professional than Saudi workers, the
second reason is foreign people accept less salary than what Saudi worker needs. I think both
reasons are unreasonable, the fact is that not all of foreign workers are better than Saudi
workers as well as usually foreigners who work in Saudi Arabia live in houses that the
companies provide them as part of their contract, this creates a substantial advantage to them
because they do not have to pay living expenses home. According to Alarabiya News “Recent
figures show that the Saudi government has issued 1.1 million visas for foreign workers over the
last 12 months. In comparison, 83,000 Saudis have been hired in the private sector during the
same period”. this number causes high rate of unemployment in Saudi Arabia approximately
10% of Saudi people are unemployed. Alarabiya News adds that to address this problem, the
labor ministry created a new decision is called “Nitaqat” designed to boost the nationalization in
the private sector. However, this plan did not work as well as expected because of the criticism
that they had from the business owners.(Alarabiya News) According to a Saudi short film, Saudi
economists believe that people who want to own their house, their monthly incomes must be at
least 4000 dollar a month. The percentage of Saudi employees who earn that salary is about 10%.
The average income for Saudi employees who work for the government is about $1,920 and
about $850 for people who work in the private sector .(Monopoly) Therefore, there is a huge gap
between the income level required for home ownership and the average Saudi’s income. So one
of the solution is to rise the monthly income for the Saudi citizen, and I do not think this is
something hard to do since Saudi Arabia is one of the richest countries in the world. Moreover,
the population of Saudi Arabia is only 28 million and 6 million of them are foreigners
In addition, Since Saudi Arabia has many vacant lands are owned by private individuals
for investment purposes, this is very lucrative for the rich people. However, it is very unfair for
middle and low class people since there is no taxes on those lands, there is no incentive for those
owners to develop the land. Some merchants buy a big number of those lands and keep them
under their names, so when people want to buy vacant lands from the merchants to build
them, they find them very expensive because the demand is much more than the supply. It is
kind of corruption and it is like the idea of stock market, and this problem can be solved by the
imposition of annual fees like what other countries do in order to make a balance, so the
percentage of that monopoly will reduce month by month and then there will be a balance
between supply and demand and the vacant land, houses and apartments will stay in reasonable
rate that most of people can handle it. It is basically, as same as the idea of taxes, and people who
have lower income can get the benefit from it.
Although Saudi Arabia has the largest real estate in (GCC) Gulf Cooperation Council,
it has the least developed mortgage market and that has really impacted Saudi home ownership
(The National). According to Business Intelligence, having mortgage in Saudi Arabia has been
debatable issue for the last decade because of religious purposes since the interest is prohibited
by Islam so banks cannot approve that kind of business unless they get benefit from people.
Therefore, most of the difficulties in having home started 10 years ago when people did not have
the ability to pay cash for having home due to the monopoly issue. Thus, 65% of Saudi
population on rent.(Business Intelligence) this is considered as a huge number comparing with
other countries. Some of Saudi people started getting loan from the banks. However, some of
them could not even return the money back to the bank so they went the jail. Everyone in Saudi
Arabia started talking about this issue as one of their hot topics in the media. Recently,
mortgages have been approved by Council of Ministries. According to Arab News, “The Council
of Ministers, chaired by Custodian of the Two Holy Mosques King Abdullah, approved on
Monday the much-awaited mortgage law, which would regulate the Kingdom’s real estate
financing and investment, and boost its mortgage market”.(Arab News) this decision seems not a
big deal for some people who already have mortgage in their countries, but it is really big deal
for Saudi citizens, as they will get benefit from banks and life will be much easier for them.
Especially for youth people, we have to keep in mind that Saudi Arabia is a young country. Most
of Saudi people are between 18-30 years old, soon they will get married and they will get the
benefit from that decision they will be able to own home, car and their future will be guaranteed
because of the strong economy. In 2008, when the financial crisis happened, Saudi Arabia
economy was not affected, so I think that makes people and banks feel more comfortable about
the mortgage.
In conclusion, I would say that, decision- maker in Saudi Arabia must be faster and more
flexible when they plan to take a decision. In my opinion, rising the salary for Saudi people is the
easiest decision, it might not be the best unless if Saudi government becomes more strict in terms
of giving visas for the foreigners workers. Otherwise it cannot work as good as people expect.
Imposing fees on the vacant lands is also a smart idea and it should be active as soon as possible
to make a balance between the demand and supply, so the prices of those lands will be
reasonable. Finally I would say that mortgage is a new thing in Saudi Arabia I hope it will be a
good solution for the Saudi young generation, so people can have the chance to own their homes.
( work cited)
“Foreign workers in Saudi Arabia weaken nationalization effort” Al-Arabiya News: Al-Arabiya
News, 13 Aug. 2012. Web. 22 Oct. 2012.
Monopoly Saudi short film. YouTube. YouTube, 2011. Web. 22 Oct 2012.
Bundhun, Rebecca. “Saudi homes market hurt by barriers to mortgages.” The National: Abu
Dhabi Media, 22 Mar. 2012. Web. 22 Oct. 2012
“Saudi addresses housing gap as home ownership deficit rises.” Business Intelligence: Business
Intelligance Middle East, 4 Sep. 2008. Web. 22 Oct. 2012
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