New Saudi Arabian mortgages move a step closer

Country:  Saudi Arabia

3 July 2008

Domestic demand for property for sale in Saudi Arabia could soon increase following the news that the Saudi Arabian government has approved a draft mortgage law.

The new legislation will allow locals to raise cheaper finance to acquire property, which in turn should help revive the country’s property sector, which has struggled over the past couple of years, following a price crash in 2006.

Currently there are few mortgages available in Saudi Arabia, due to the immature nature of the sector, which means that many deals are only available with high borrowing costs attached.

If the new law is indeed approved then mortgages will be widely available across various finance houses and banks.

The government’s decision to introduce the legislation comes at a time when the country is facing a large housing shortage. The country’s housing market is expected to attract around £90bn in foreign direct investment by 2015.

It’s estimated that there will be a housing shortfall of around 1.3m homes over the next seven years, with greatest shortage in the top four provinces of Makkah, Riyadh, Madinah and Eastern Province.