Riyadh, Jul 29(Arab News): Prominent realtors have asked house buyers who have received government loans to wait until a new mechanism is implemented to help them own homes while meeting the lending agency’s conditions that link the size of the loan to the built-up area of the chosen property.

The realtors’ call gains significance in the wake of the disbursement of more than SR5 billion by the state-owned Real Estate Development Fund to 10,473 citizens in various parts of the Kingdom.

It is impossible for citizens to meet loan conditions while taking into account the soaring prices of real estates and housing units at present, Al-Jazirah newspaper reported.

Custodian of the Two Holy Mosques King Abdullah issued on March 18 a decree increasing personal loans extended by the General Housing Authority and the Real Estate Development Fund from SR300,000 to SR500,000.

Commenting on the disbursement of housing loans, realtor Khaled Al-Mobaid said it would reflect the sincere intention of the government to make available housing units to citizens with limited incomes. It would also enhance the credibility of citizens involved in schemes aimed at addressing the housing problem, he said.

“As a realtor, I have seen the happiness and satisfaction of the beneficiaries of such housing loans. They have choices either to buy plots of land and build houses or buy properties at reasonable rates,” he said.

“However, there has been an exorbitant increase in the prices of real estate due to high demand. Some developers and investors are exploiting this situation by offering small housing units at a high price,” he said.

Waleed Al-Zouman, another realtor, noted that pumping more money into the sector would lead to a hike in the prices of land as well as housing units.

“This is because demand is much higher than supply. Increased loans announced by the government will not be sufficient to buy housing units because of the soaring prices,” he said, adding that beneficiaries of the loan are not in a position to fulfill the terms and conditions set by the Fund.

Al-Zouman suggested the best way to overcome this problem is to build low-cost housing units that are equivalent to the loan amounts set by the government. Al-Zouman cited several successful experiments that demonstrated his claims such as the Sulai and Al-Maadar housing compounds in Riyadh.

“The government can build huge residential towers and sell the housing units to citizens with limited incomes,” he said, adding that it is currently very difficult to obtain plots of lands to build houses at cheaper rates.

Meanwhile, many citizens pointed out that they are not in a position to own a housing unit in a way fulfilling the conditions set by the Real Estate Development Fund.

Molhem Al-Dosary, a beneficiary of the loan, said that he had to set out in search of a residential apartment after sanctioning SR500,000 from the Fund.

“After an arduous search, I was able to find an apartment in east Riyadh. The apartment with an area of 180 square meters was priced at SR460,000,” he said, adding that he gave a down payment for the property to a real estate office.

“But then I found out from officials of the Fund that the builtup area of the apartment was too low for the loan approved and I was only entitled to a loan of SR360,000. They told me that SR500,000 would be given only to those who want to own an apartment with a minimum builtup area of 250 square meters,” he said, claiming that such properties cost about SR750,000.

Salem Al-Matrafi, another citizen, said: “When I found out that my name was on the list of beneficiaries for the housing loan, I went out in search of a home in north Riyadh. I found a 250 square meter apartment but its price was SR780,000. Therefore, I was forced to drop my plan of taking out the loan due to my inability to raise the remaining SR280,000.”

Hamad Al-Ali, a dealer in lease-to-own apartments, said the minimum price for a 140 square meter housing unit with three rooms and a hall is SR390,000, whereas a 210 square meter unit with four rooms costs SR650,000.

An official source at the Fund told the newspaper that they will look into the matter seriously.

“We will explore the prospect of reducing the required area for residential units in order to approve a certain amount of loan,” he said while noting that the Fund normally gives loans that cover only 70 percent of the cost of a housing unit.

The source also blamed realtors for the exorbitant increase in current prices of real estate and residential units.