The Economist Intelligence Unit touched on the housing crisis in Kuwait, noting that the government had recently approved funding of 2.1 billion dinars for the South Saad Al Abdullah housing project, which is one of the projects being built on the outskirts of the capital, aimed at alleviating the shortage in this area.
However, the unit believes that the growth in housing demand will continue to outpace the growth in the supply of new homes until 2026, while political paralysis continues to impede the necessary reforms of the systemic imbalance that the market suffers from, reports a local Arabic daily.
The housing sources pointed out that the chronic housing shortage for the young segment of the population of Kuwait, which is rapidly increasing, has always been a cause of great resentment, because the waiting times for allocating government housing have become longer, often by about a decade, with a backlog of requests from more than 100,000 people who wish to obtain housing.
As part of the generous benefits enjoyed by citizens, every Kuwaiti couple, regardless of their income, is entitled to land to build a house, and a loan of 70,000 dinars, free of interest from the credit bank.
But restricted supply, and speculation driven by high investment returns, have pushed prices for the private housing sector to be more than 20 times the average annual salary, a level beyond the reach of most Kuwaitis.
The Economist Intelligence added that real estate financing was limited as a result of the failure of successive governments to approve a draft mortgage law that was published in mid-2020 in the National Assembly due to the ongoing political conflict.
Under this law, the government covers part of the interest on housing loans from commercial banks. The unit expected that the government’s decision to inject 800 million dinars in liquidity into the Credit Bank in January would have a marginal impact on the problem.
It believes that there is a moderate acceleration in addressing the supply side with the recovery of international oil prices, which allows an increase in capital investment.
It quoted Finance Minister Abdulwahab Al-Rasheed as saying, during his announcement of the financing of the South Saad Al-Abdullah project (which will be distributed over several annual budgets), that housing is a priority for the government (current caretaker government which resigned in early April).
The project, which extends over an area of 59 square kilometers, will include at least 25,000 housing units that will be built on the basis of a “smart city” under a joint project agreed upon in 2016 between the Public Corporation for Housing Welfare and a South Korean consortium.
In March 2021, the main Chinese contractor handed over the second batch of housing units in the South Al-Mutla’a project in Jahra Governorate, which is the largest planned project, which will be built on an area of 120 square kilometers and provide housing for 400,000 people upon completion.
The Economist Intelligence expected that high oil prices and popular pressure will contribute to an increase in government spending on housing, especially in 2022-2024, which will stimulate the construction sector.
At the same time, she pointed out that the continuous delays in projects and the failure to carry out fundamental reforms to the system as a result of the chronic tensions between the government and the National Assembly, will hinder progress and increase social discontent.
