Saudi Arabia's Shura Council has approved a draft law to reform the kingdom's mortgage market - with video.
Saudi Arabia embarks on mortgage reform
After years of false starts the Saudi Arabian government has approved a draft law expected to spark sweeping changes in the country's mortgage laws.
The kingdom's Shura Council earlier this week approved a the law that would create a traditional mortgage system, providing a boost to both the financing and construction sectors.
"It's obvious this time it is very real," said Imad Damrah, country director for Colliers International.
The move comes on the heels of King Abdullah's promise on March 18 to spend $67 billion (Dh246bn) to build 500,000 homes. The kingdom is also establishing a Ministry of Housing to oversee construction of affordable housing.
Only about 30 per cent of the Saudi Arabian population own their homes. And only about two per cent of home purchases in the kingdom are financed by mortgages, according to industry estimates.
About 150,000 new homes a year are needed over the next 10 years to satisfy demand, according to Jones Lang Lasalle.
The mortgage law is expected to set up procedures for foreclosures and repossessions. It would also regulate the finance industry and ensure compliance with sharia law, according to initial reports.
"It seems like it's ready to go and that's a positive thing," John Harris, head of Jones Lang Lasalle's Saudi Arabia office.