Categorized | International

Increasing Land Values Negatively Affect Housing Growth in Saudi Arabia

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Buildable yet undeveloped land values continue to rise in Saudi Arabia. While the increase in land values would seem to be a positive thing for most nations, it has hampered the country’s efforts to bolster their housing market.

The Saudi government had announced roughly nine months ago that the nation would look to increase its high ownership rates by increasing the number of housing units available to the general public. Currently only thirty-five percent of the population owns homes. Those that make up the lower and middle socioeconomic classes are among the majority that does not own a home in the nation.

Unfortunately, the efforts to increase the number of available housing units have been diminished by the lack of incentives for landowners to consider developing property on their land. The increased value in undeveloped land has made it very difficult for the Saudi government to enact their housing development plan.

Some economic analysts, though, warn that the undeveloped land market is not sustainable, and that landowners that refuse to consider developing on their land may see in the near future a crash similar to that of the United States stock market.

However, landowners cite that undeveloped land has provided for far greater returns than both the stock market and housing market in the past year. Values for undeveloped land have seen a yearly increase of fifteen percent whereas the housing market has only increased between five and six percent in the past year. As long as values for undeveloped land increase at far greater rates than those of developed real estate, it is unlikely that landowners will consider building on their properties.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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