Saudi Housing by Mohammed Alzahrani

Mohammed Alzahrani

ENGL113b

Prof. Beiber

October 30, 2012

                                               The Saudi Housing Problem

               The home is the most important thing for the middle class people in Saudi Arabia because it represents the social life of the typical middle class family. Although, Saudi Arabia has a strong economy with a lot of natural resources and financial facilities, the Saudi people face a housing problem that might affect the Saudi society and exposure it to socioeconomic problems. The problem of housing is complicated because of the low lack of investment, high rate of unemployment, the finance problem, and the high prices of building materials.

           Population distribution is considered one the main problems that affect the house owning in Saudi Arabia. The ministry of Economy and Planning in Saudi Arabia reveal the annual report of the human development, and it shows that more than three fifths of the populations live in major cities of the kingdom (MEP). There are 13 provinces in Saudi Arabia and each province contains between three to five cities. However, that affects house owning because more than 60% of the populations live in three cities of Riyadh, Jeddah, and Dammam that will result an increasing in the prices of homes in these cities. In consequence, the market of building materials is affected from the high demand in the three main cities and that result to the raising the prices in these cities, which defiantly, affect the people who are trying to own a house.

         The low lack of investment in properties and the low supply of properties is an obstruction that affects house owning in Saudi.  Properties Businessmen chose the alternative investments such as, stocks markets and technological investment; that have a better profit. The businessmen changed their investment field from the properties to other kind of investment because the prices of building materials such as cement, wood, steel, ceramic, accessories, and other materials have raised to illegitimate prices. That increasing occurs in the main cities nevertheless, the small cities in the kingdom get the same prices from the factories in the main cities. Also, most of the Saudi businessmen are looking for the fastest way to get a good profit; however, that means a consideration of the mathematical law of proportion and fit by the businessmen, this law applied with deliberating the fact of many people can’t afford homes and the investment of prosperities takes a long time to get a good profit; and a short time to get a reasonable profit. From other point of view, people put the price of houses in consideration because they think it is useless to pay huge amount of money in a small house with low quality of infrastructure such as plumbing, and electrical wires.

         The shortage of financial resources is a main cause of less house owning in Saudi. Most of people use different financial facilities such as loans and savings to build or buy a house. The Islamic law takes a place in Saudi, and it forbid the loans that contain any interest rates. Therefore, most of Saudi follow the Islamic law and avoid using loans with rates. Even though, the Islamic law forbids interest rates, Saudi Banks deal with a loan that contains rates of interest to follow the international systems of banking. Also, the banks offer other kind of loans which doesn’t deal with interest of rate, for instance, when a customer ask from the bank to buy 1 kilogram of Gold with $70,000 and sell with $63,000 in the market, and the customer pay it to the bank monthly. The good thing about this loan is to get financial resource but the problem that this amount of money will allow the customer to facilitate 20% of the home project if the average home price is $350,000. The financing is a huge problem in Saudi that has to be solved to let people live in houses.

           The Saudis can’t afford homes because they have to spend money on unnecessary materials in house building. The Saudi Homes contain a lot of frills decoration to show the cultural background in home designing. For example, most of the Saudi families use marble for the inside floors and the outside face of the home to show the luxury of the home, and that in fact cost especially, if we know that the square meter of marble cost almost a $ 300 at least. Also, other example, when the area of the land is a 1,20the Saudi family use the area to build a big house on it that contain extra rooms, and useless area. In my opinion, if Saudis use the idea of building simple houses that contain an excellent infrastructure, with using cheap strong materials, like wood, painting, and wood floor, the home will be affordable

        The government legislate many laws and provide support for housing problem.

Because Saudi Arabia is an absolute monarchy, the king is the only one who legislate laws and that was a big problem because this dilemma needs specialists and experts that know what do to solve it. So in 2011, The King announced $ 66.7 billion for housing (Alsharif), that allow building 2 million houses and selling it to the people, and the people pay a monthly amount of $288 for 25 years. This project is building 500,000 houses a year for the next four years. The government solution is useful for the current time and the short future of the next 5 years; because the new regulations and development plans gives the people an access to own houses for the short term without considering another legislations that regulate the properties market for the next decades. For instance, the government ought to take actions toward the illegitimate increasing for the building materials. Furthermore, Zainab Fattah, quote for Naveed Siddiqui, the chief executive officer of Capitals Group International “The government will have to allow non-banking financial institutions such as mortgage companies to come in to stimulate the market.” (Fattah)

           In conclusion, house is the most important to the Saudi people because it is the only thing that represents the Saudi family. The house ought to be easier to get by decreasing and controlling the prices of building materials therefore, will result a decreasing in houses prices. Also, the government made a good improvement for the next few years but they should enroll in planning for the housing marketing for the next decades to regulate the market and legislate laws.