High costs, inadequate access to mortgage financing and a lack of suitable options are the main barriers to homeownership in Saudi Arabia, a property consultancy says.
"Saudi Arabia has the largest real estate market in the GCC but the least developed mortgage market, and this has resulted in a shortage of owner-occupied residential housing, particularly at the lower end of the income scale," analysts at CBRE said in a report released yesterday.
Saudi Arabia's mortgage penetration rate is estimated to be about 2 per cent, while the UAE has a rate of about 14 per cent, CBRE said. "Even this figure is well below mature western markets such as the United Kingdom, where the penetration rate is currently around 70 per cent."
Despite a shortage of housing in Riyadh, CBRE highlighted that apartments were unpopular among Saudi nationals, partly because of the lack of privacy and because the properties could not be expanded.
"The demand for expatriate compounds in Riyadh is very strong at present, with very high occupancy and rapidly growing rents, partly due to a current mismatch between demand and supply," the report stated.