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May 01 2011

Housing demand to grow by up to 35% this year, says study

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KSB Capital Group, Real Estate Development Fund

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JEDDAH: Demand for housing units in the Kingdom is expected to increase this year by between 25 and 35 percent compared to previous years, according to a new study.

While the demand for medium-sized apartments will grow at great speed, the demand for small apartments and large housing plots will fall, according to the report prepared by the Research and Development Department of the KSB Capital Group and published by Al-Eqtisadiah daily on Saturday.

The report attributed the new market trend to a recent decree issued by Custodian of the Two Holy Mosques King Abdullah aimed at easing the housing problem. According to the decree, the limit for housing loans from the General Housing Authority and the Real Estate Development Fund ( REDF ) was raised from SR300,000 to SR500,000. The decree also called for a scheme to launch housing projects.

Rising property prices in locations people prefer to own homes is another factor that is discouraging people looking for large houses. The housing market is also awaiting the publication of new mortgage regulations and the announcement of REDF 's simplifications of conditions for loans. "The features of the housing market are set to change in the near future. There will be demand for products of certain set specifications such as apartments meant for hire purchase with space reaching up to 239 sq. meters and a price tag of SR500,000, which is the new housing loan limit. Small-sized villas built on a space of no more than 390 sq. meters with prices not exceeding SR1 million will also be in demand. Conversely, the demand for small-sized apartments and large villas will fall," the report said.

Consumers are also looking for plots of 250 sq. meters so that they may build houses within the limits of the loans they can get, it said.

The report added that the property market is also awaiting the enactment of the land mortgage bill, which has been passed by the Shoura Council and submitted for royal approval. It is hoped that the bill will regulate rentals and property prices, which would in turn inject fresh energy into the market.

Another factor that would take off the pressure from the housing market is the Ministry of Housing's plan to construct 500,000 apartments over the next five years in line with the royal decree allocating SR250 billion to build new houses.

© Arab News 2011

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