Realizing the dream of owning a home: A preliminary study of house purchase financing options for low‐income Saudis

Abstract

Purpose

This study aims to investigate the house purchase behavior of low‐income Saudis regarding the sources of financing they wish to have access to, their preferences for alternative financing options, and the monthly payment amounts they could afford to make in case of mortgage financing across demographic groups.

Design/methodology/approach

A survey with a sample of 815 low‐income respondents with a monthly income of SR7,000 was conducted using a structured questionnaire.

Findings

The main findings of the study are that the loan from the government Real Estate Development Fund (REDF) is found to be the most preferred financing alternative, the second being cash payment; whilst the most frequently indicated option for monthly mortgage payments is between SR1,000 and SR1,500 (US$267 and US$400) among low‐income Saudis.

Research limitations/implications

This study provides a snapshot of low‐income Saudi consumers' knowledge of financing options and their choice among alternative financing options.

Practical implications

This also offers opportunities for real estate developers to seek competitive advantage by coming up with innovative financing options to target low‐income earners.

Originality/value

There is limited published work exploring consumer knowledge of house purchase finance options that captures this phenomenon from the perspectives of low‐income Saudi consumers. This study contributes in filling this gap.

Citation

Opoku, R.A. and Abdul‐Muhmin, A.G. (2013), "Realizing the dream of owning a home: A preliminary study of house purchase financing options for low‐income Saudis", International Journal of Housing Markets and Analysis, Vol. 6 No. 3, pp. 300-316. https://doi.org/10.1108/IJHMA-08-2012-0037