According to this Arab News report, the Saudi government has come up with a new program to offer loans (essentially mortgages) to government employees and retirees. The 25-year, interest-free loans would be repaid by way of income withholdings of either 1/3-1/4 of paychecks. A major condition is that the borrower be debt-free when applying. The government is allotting SR 10 billion (US $2.67 billion) to the program. Those receiving welfare payments from the General Organization for Social Insurance (GOSI) are not elegible for the program.
It looks like a good deal, but only if the amounts loaned match up with the price of housing.
SR10bn housing scheme for government servants
RIYADH: The Public Pension Agency (PPA) has launched a SR10 billion scheme to finance housing for people in government service, including retirees. The scheme would cover both civil and military sectors, a high-ranking official speaking on condition of anonymity said recently.
“Over 1,000 applications, out of 6,700 received so far, have been approved to buy houses under the scheme,” the official said, adding that over SR200 million has been distributed as loans to people to build houses.
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September:06:2008 - 20:46
John,
At the surface these programs look great as they provide middle class Saudi’s with home ownership. However, every time a similar program has been tried in Saudi, the result is an increase in property values due to the spike in demand the programs create and the enrichment of land owners. This puts homes more out of the reach of the middle class. I am not sure this will occur this time as the number of applicants look small.
I do like the idea of the program, but I would like to see an associated plan to provide more lands ready for construction (i.e. have all the required services) to combat the rise in demand with similar increase in supply.