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Saudi Arabian mortgage law 'may trigger price bubble'

28 Jun 2010

Saudi Arabian mortgage law 'may trigger price bubble'

The first mortgage law in Saudi Arabia, which is expected to be launched this year, may trigger a price bubble.

This is said to be the opinion of some authorities that are concerned that property developers will ignore the legislation, the Saudi American Bank Group - now known as Samba - told Emirates Business 24-7.

Prices in the kingdom have already increased sharply because of speculative investment in recent years, it added.

And although the law is designed to curb rapid hikes, some of the parties already privy to the information say "it lacks details about implementation mechanisms".

Many believe the kingdom will delay approval of the legislation, but others are keen for it to take effect and stabilise the property and construction sectors.

"The law would allow banks to tap into considerable pent-up demand for housing among Saudi Arabian nationals, the majority of whom do not own their own home," under-secretary of the ministry of trade and industry Hassan Akeel was quoted as saying.
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