Although the Shoura Council last week refused to rule on the proposal of granting a housing allowance to Saudis, the issue has managed to create a fresh controversy among experts in the real estate market. The estimated cost of the housing allowance will range from SR50-75 billion, economic experts have said, according to a report in Al-Eqtasadiya newspaper. They said the Shoura Council should set effective regulations so housing allowances match the current rental prices of residential apartments. They pointed out that the rental rates have shot up in the past four years and that government employees, from the low and middle class and who do not have their own houses, need a proper allowance. Dr. Abdul Rahman Al-Zamil, a former Shoura Council member, suggested that each governmental employee who does not own a house be given SR40,000 in allowance. He said the housing allowance should not be based on the employee's salary because low-rank employees will not be able to pay the rent because their salaries are low and rental prices have gone up. “I do not expect the rental prices to go up if the housing allowance is approved by the Shoura Council,” he added. Muhammad Al-Omran, an economist, said: “Based on the statistics that 70 percent of Saudis do not own a house, I expect that SR50-75 billion of the state budget will have to be allocated for the housing allowance. Keeping current oil prices in view, this amount will not affect the state budget. As long as the annual average price of a barrel of oil is not below $60, there will be no effect on the budget.” It is not clear whether the Shoura Council will agree on two, three or four salaries every year for the housing allowance. Dr. Al-Omran believes that a minimum housing allowance should be set and that the maximum allowance should not exceed SR60,000 per year. Dr. Adnan Al-Shiha, a business professor at King Saud University, says the best solution is to build residential units for government employees as SABIC and Aramco have done. “Monopolization in the real estate market leads to price inflation. Building residential units for employees will decrease demand on residential units, thus reducing their prices,” he said. Dr. Osama Abu Ghararah, former Shoura Council member, said: “If approved, the housing allowance should not be given to employees with high salaries or those who own a house. I hope the Shoura Council approves the housing allowance for low- and middle-rank employees.” Dr. Abdul Wahab Abu Dahesh, economist and member of the real estate committee in the Riyadh Chamber of Commerce and Industry, said the government is determined to solve the housing problem by increasing the capital of the Real Estate Development Fund and through the 500,000 residential units that King Abdullah ordered be built at a cost of SR250 billion.
