Nawaf Y. Husein
Faculty Member
Msc, CRP , CLBB
Saudi Training Society Member
Institute of Banking
Saudi Arabian Monetary Agency ( SAMA)
P.O.Box : 10820 Riyadh 11443 Saudi Arabia
Tel : + 966 1 463 3000 Ext. 3825
Fax: + 966 1 466 2368
Mobile : + 966 55 48 44 828
SKYPE : abuhejleh2
Dear Readers,
Housing has emerged as one of the key policy focus areas in the Gulf region as governments seek to meet the challenges created by their rapidly growing, young populations. Mortgages are seen as critically important for broadening access to housing. Historically, home purchases have depended heavily on personal/family resources as well as subsidized loans from special government funds.
· A comprehensive institutional infrastructure is needed for efficient mortgage markets. The international experience suggests that the level of mortgage lending tends to be critically dependent on having adequate facilities for registering properties and mortgages, ensuring cost-effective access to credit information, providing for efficient foreclosure systems, and establishing proper secondary markets. Significant progress has been made in addressing these issues in the Gulf but numerous hurdles remain.
· The emerging market experience provides examples of rapid mortgage growth. A number of emerging markets – led by Malaysia, Mexico, and Korea – have successfully used mortgage markets as a way of boosting home ownership. These advances have been underpinned by clear regulation and institutional reform. But improved access to housing has remained critically dependent on government support through subsidies, alternative loans, or secondary markets. Regulatory interventions have been undertaken in some cases to contain market bubbles.
· Modern mortgage markets are critical for meeting the growing housing needs of the Gulf region. The dedicated government housing funds have struggled to meet the demand and long queues have become common. Mortgage lending has taken off across the region and is in some cases used to augment government loans. Nonetheless, mortgage penetration remains low by global standards with the value of outstanding mortgages in even the most established markets totaling less than 20% of GDP, as compared to a developed world average of 60%.
· Mortgages are not enough. As much as proper mortgage markets can significantly improve access to adequate housing, the goal of very high home ownership is unrealistic. Virtually all established housing markets have grown with a significant element government-sponsored social housing. The current income distribution along with high land and input costs means that government provision of housing will have to play an important role in the GCC as well.
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Best regards,
NCB Economics Department
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