The Ministry of Housing in Saudi Arabia (MOH) commissioned Omrania to develop the master planning for 26 new residential communities in the western region of the Kingdom.  Part of the contract’s package included advising the MOH on outlines of a national housing policy based on international best practices.  Our team (pre-LUGARIT) subcontracted from Omrania this part of the package.  

The project presents a comprehensive analysis of the housing sector in Saudi Arabia, informed by global trends and best practices. The study aims to establish a theoretical framework for developing a housing policy in Saudi Arabia, focusing on affordable housing and leveraging international experiences to understand and improve the local housing sector.

The study observes the shift in the role of governments worldwide in housing, from being direct providers to facilitators. It highlights the limitations of supply-support policies, which often result in resource wastage and benefit unintended recipients, leading to market inflation and speculation. In contrast, demand-support policies, despite initial price fluctuations, offer better access to housing for target groups. However, the study notes that broader structural challenges, such as funding mechanisms, tenure guarantees, and administrative decentralization, significantly impact the housing sector.

In analyzing Saudi Arabia's housing sector, the study identifies several key findings:

1. Rapid urban growth has led to unprecedented housing demand, largely met due to oil revenues.

2. Despite declining birth rates, urban growth continues, driven by younger generations.

3. Estimates suggest a consistent annual demand for at least 150,000 housing units.

4. Competition with the commercial real estate sector and speculation is hampering the residential market.

5. Government policies predominantly support supply, with limited success in addressing affordability.

6. The dominance of the Real Estate Development Fund stifles private sector participation in housing finance.

7. There is a misallocation of housing support, with beneficiaries often transferring loans for profit.

8. Government support mechanisms are disrupted by speculation, creating artificial housing shortages and price inflation.

9. The population distribution by income aligns closely with the distribution of housing types, except for a slight over-representation of villas.

10. Government support has created unrealistic expectations and disparities in housing accessibility.

11. Rapid urbanization has led to social and cultural challenges due to spatial segregation.

12. Non-Saudi residents significantly influence the housing market.

13. There is a need for accurate and continuous monitoring of the housing market.

14. Centralization at the Ministry of Housing (MOH) leads to inefficiencies and missed opportunities for local solutions.

15. The housing sector's potential to stimulate economic activity is underutilized due to reliance on foreign labor and imported materials.

The study concludes with several recommendations to improve housing policy in Saudi Arabia:

1. Balance supply and demand support policies for viable and inclusive results.

2. Develop frameworks for direct funding and separate housing provision from funding.

3. Restructure the Real Estate Development Fund to support affordable housing and ensure transparent competition.

4. Expand legal frameworks addressing tenure, planning, and public participation.

5. Implement communication policies to align public expectations with realistic housing options.

6. Decentralize housing sector management for more effective local solutions.

7. Adopt flexible planning policies with public participation and continuous data updating.

8. Conduct feasibility studies for housing projects and establish national urban design guidelines for affordable housing.

In essence, the study emphasizes the need for a balanced, decentralized approach to housing policy in Saudi Arabia, focusing on demand-support policies, legal and administrative reforms, and public participation to address the diverse needs of the population and stimulate economic growth.