Saudi Arabia''s first mortgage law is expected to be implemented this year and its provisions will protect all parties involved, Finance Minister Ibrahim al-Assaf said on Tuesday.
"It should be in 2009, definitely," Assaf told Reuters in an interview. "I agree that it has taken us much longer than we had hoped at the beginning".
A draft law, which has been in the works for almost a decade, was approved last year by the advisory Shura Council and is now being examined by the council of ministers, Assaf said.
"If there are no major changes then it should be approved with no further delays. But if there are major changes from ... that which was approved by the Shura, then it has to go back to the Shura Council again," Assaf said.
"Hopefully any changes and adjustments will be minimal and not major," he added.
Realtors say the percentage of home ownership barely reaches 25 percent, making it the lowest among the oil-driven economies in the Gulf Arab region.
A surge in construction costs, land speculation coupled with a lack of bank financing and poor government assistance have aggravated a housing deficit estimated at some 1 million homes and driven rents higher.
The low home-ownership ratio has for a long time exposed some of the weaknesses of Saudi Arabia''s wealth distribution policies, at least on a regional scale.
Local banks have been looking forward for the mortgage law to be enacted because of the huge business potential that it is set to unlock.
Assaf said the law will "protect all players" noting that it also covers eviction procedures in case of payment defaults.
The current global crisis should not have an impact on the approval of the law because the local banking system has been largely immune to the effects of the global crisis, he said.
"We need this law regardless of ... the temporary situation of the financial sector, whether it is in a very healthy situation or in a bad situation," he said.
"It should be good for all times ... It will be a good one even with the current market (conditions)," he added.
Hopes, raised over the past six years by the oil price surge, suffered after a stock market crash in 2006 wiped out savings of tens of thousands and forced many to abandon plans to own a house.
The Saudi property market now fits more with the needs of high-income households than those with middle-income and below, investment bank Rana Investment said in a report in August.
The government already provides an annual 5 billion riyals to state-owned Real Estate Development Fund which provides housing loans to poorer Saudis. (Reuters)