Housing Programme Phases Compared: Foundation (2017-2020) vs Scaling (2021-2025) vs Maturity (2026-2030)

Housing Programme Phases: Tracking Saudi Arabia’s 14-Year Transformation

The Housing Program Delivery Plan operates across three phases spanning 14 years, each with distinct objectives, institutional dynamics, and performance characteristics. Phase 1 (2017-2020) established the foundation by launching Sakani, reforming mortgage regulation, and releasing decades of suppressed demand. Phase 2 (2021-2025) scaled delivery through institutional developers, expanded financing, and policy innovation. Phase 3 (2026-2030) must achieve maturity by closing the final 4.6 percentage-point gap to 70 percent homeownership — serving the hardest-to-reach cohorts with the most complex affordability challenges.

Comparing these phases reveals both the programme’s remarkable achievements and the evolving nature of the challenge. The trajectory from 47 percent homeownership in 2016 to 65.4 percent by end 2024 — a gain of 18.4 percentage points in eight years — is an extraordinary accomplishment that has reshaped Saudi society. But each successive percentage point has required more institutional capacity, more financial commitment, and more sophisticated policy design than the one before.

Phase Comparison Matrix

Phase 1 (2017-2020): Releasing Suppressed Demand

Phase 1 captured the lowest-hanging fruit in the homeownership programme — families with latent demand and financial capacity who needed only barrier removal to achieve homeownership. The 13 percentage-point increase in four years (47 to 60 percent) reflected decades of suppressed demand being released through institutional innovation.

Institutional Foundation: The launch of the Sakani platform in 2017 created a unified digital gateway for housing support that replaced a fragmented, paper-based application system. For the first time, Saudi families could apply for housing support, check eligibility, receive subsidy allocations, and browse available properties through a single platform. This institutional innovation was the programme’s most consequential early decision — it created the delivery mechanism through which all subsequent phases would operate.

REDF reform transformed the Real Estate Development Fund from a traditional government lending institution into a subsidy distribution mechanism. Rather than originating loans directly (a slow, bureaucratic process), REDF partnered with commercial banks to provide profit coverage on privately originated mortgages — dramatically accelerating the flow of financing to eligible families. This reform leveraged the commercial banking system’s origination capacity while using government funds to subsidise affordability.

Mortgage Market Activation: SAMA’s LTV relaxation from 85 percent to 90 percent for first-time buyers — reducing the down payment from 15 percent to 10 percent — removed a critical barrier. For a SAR 700,000 property, this change reduced the required down payment from SAR 105,000 to SAR 70,000 — a SAR 35,000 reduction that brought homeownership within reach for tens of thousands of families who had sufficient income for monthly payments but lacked adequate savings.

The further reduction to 5 percent for REDF beneficiaries through the Dhamanat Guarantee Program — launched in 2017 with SR 18 billion in capital — cut the down payment to SAR 35,000 for properties under SAR 800,000. Combined with non-refundable grants of SAR 100,000 to SAR 150,000, the effective cash requirement for homeownership dropped dramatically.

The mortgage market responded explosively. From approximately SAR 200 billion in total real estate lending, the market began a growth trajectory that would reach SAR 800 billion by 2024 and SAR 951.3 billion by end 2025. This quadrupling of the mortgage market in under a decade represents one of the most rapid financial sector transformations in the region’s history.

Demand Profile: Phase 1 families were characterised by high readiness — they had stable employment, adequate income for mortgage payments, and latent desire for homeownership. They were blocked not by fundamental affordability constraints but by institutional barriers: lack of an accessible application process, high down payment requirements, and limited subsidised financing options. Removing these barriers released demand that had accumulated over decades of undersupply and institutional inadequacy.

By end 2020, 834,000 Saudi families had been served, and 310,000 had already occupied new homes. The homeownership rate reaching 60 percent validated the programme’s foundational design and created political momentum for the scaling phase.

Phase 2 (2021-2025): Scaling Institutional Delivery

Phase 2 maintained momentum but at a declining rate of homeownership gain — 5.4 percentage points over five years (60 to 65.4 percent) compared to Phase 1’s 13 percentage points over four years. This deceleration was not a programme failure; it reflected the predictable dynamic of diminishing returns as the programme moved from high-readiness to moderate-readiness cohorts.

NHC Scaling: NHC’s transformation from a ministerial arm to the Kingdom’s dominant residential developer was Phase 2’s defining institutional achievement. Established in 2016, transferred to state ownership in 2020, and rebranded in November 2024, NHC scaled from a nascent entity to a company generating SAR 26 billion in annual revenue with 62 percent off-plan market share, operating 39-plus major projects across 17 cities.

NHC launched more than 134,000 new housing units in 2025 across 25 urban destinations, with total value exceeding SAR 100 billion. Over 134,000 units were sold to date, and 60,000-plus families moved into NHC developments. The company generated 600,000 jobs in 2024 with plans for 150,000 more in 2025. Its international partnership programme reached SAR 40 billion with 36 developers from 7 countries.

Mortgage Market Maturation: The mortgage market expanded to SAR 951.3 billion in total real estate loans by end 2025. SRC completed the Kingdom’s first RMBS transaction in August 2025, completed a SAR 20 billion guaranteed local sukuk programme, and launched a USD 5 billion international sukuk programme on the London Stock Exchange with a USD 2 billion first issuance oversubscribed 6 times. SRC’s refinancing deals exceeded SAR 12 billion with 85 percent growth. These capital market developments created the secondary market infrastructure needed to sustain mortgage origination at scale.

However, mortgage origination showed signs of strain by late Phase 2. New residential mortgage loans in 2025 totalled 108,795 contracts valued at SAR 80.42 billion — down 11 percent from the prior year. December 2025 origination of SAR 5.55 billion was more than 53.5 percent below December 2024’s SAR 11.94 billion. This deceleration suggests that the moderate-readiness cohort is reaching its limits under current subsidy and affordability parameters.

Policy Innovation: Phase 2 introduced two landmark regulatory interventions. The Riyadh rent freeze — enacted September 2025, freezing rents at 2025 levels until September 2030 with fines up to 12 months’ rent for violations — addressed the immediate affordability crisis in the capital where apartment prices surged 82 percent since 2019. The White Land Tax reform — replacing the earlier flat 2.5 percent rate with a progressive structure up to 10 percent — targeted over 5,500 vacant plots covering approximately 411 million square metres of undeveloped land to increase supply.

SAMA Rate Cycle: The rate environment shifted dramatically during Phase 2. After a rising cycle earlier in the phase, SAMA cut the repo rate six times beginning August 2024 — from 5.50 percent to 4.25 percent by December 2025, the lowest in over three years. This 100-basis-point reduction improved mortgage affordability and signalled supportive monetary conditions for the housing programme. Rates have been maintained unchanged since December 2025.

Demand Profile: Phase 2 families included a mix of ready buyers (continuing from Phase 1’s pipeline) and moderate-readiness families who required more support — higher subsidy rates, lower down payments, longer platform processing — to achieve homeownership. The 5.4-percentage-point gain over five years required 117,000 families served in 2024 alone, with 93,000 moving into homes (9 percent increase over 2023) and 107,000 housing finance contracts signed.

Phase 3 (2026-2030): The Hardest Kilometres

Phase 3 faces the most challenging task of all three phases: closing the remaining 4.6 percentage-point gap from 65.4 percent to 70 percent homeownership while serving families with genuine affordability constraints that subsidies alone may not resolve.

The Diminishing Returns Dynamic: Each successive percentage point of homeownership requires serving progressively harder-to-reach families. Phase 1’s 13-point gain served families who were essentially ready but blocked by institutional barriers. Phase 2’s 5.4-point gain served families who needed financial support but had sufficient income for subsidised homeownership. Phase 3 must serve families where the affordability gap is widest — lower incomes, less stable employment, higher existing debt, or residence in areas where even subsidised housing exceeds their capacity.

The required annual rate gain of approximately 0.77 percentage points — while arithmetically modest — must be achieved against this adverse selection dynamic. Each percentage point represents roughly 50,000 to 75,000 families, requiring sustained institutional delivery, financing support, and policy innovation.

Supply-Side Requirements: The combined institutional delivery targets for Phase 3 are staggering. NHC’s 600,000-unit mandate and ROSHN’s 400,000-unit target create a combined commitment of one million homes. NHC has SAR 220 billion in government allocation and SAR 40 billion in international partnerships. ROSHN has PIF backing but its pipeline of approximately 155,880 planned units is considerably below the 400,000-unit target, requiring approximately 115,000 units per year (per Knight Frank) to close the gap.

The USD 43 billion five-year construction plan for 240,000 housing units, the residential construction market growing at 5.17 percent CAGR to USD 25.21 billion by 2030, and the construction industry’s forecast 5.2 percent annual growth from 2025-2028 provide the macro framework for supply delivery.

Financing and Demand-Side Challenges: The mortgage market must expand from SAR 951.3 billion to SAR 1.3 trillion — an increase of approximately SAR 350 billion. Achieving this requires sustained mortgage origination at volumes that exceed 2025’s 108,795-contract, SAR 80.42 billion performance. Jadwa Investment expects mortgage demand to gradually improve during 2026, supported by declining rates and greater housing availability, but the 11 percent origination decline in 2025 suggests recovery is not automatic.

The SAMA rate environment remains a variable. At 4.25 percent — the lowest in over three years — rates are supportive. But the SAR-USD peg means future rate movements depend on Federal Reserve decisions. If the US enters a rate-hiking cycle during Phase 3, Saudi mortgage rates would increase, potentially constraining demand precisely when the programme needs acceleration.

Phase 3 Policy Instruments: Several policy instruments are available or being deployed for Phase 3:

• Foreign Ownership Law: Effective January 2026, replacing restrictive rules with zone-based approach. Opens new demand segment (international buyers) and new capital flows (foreign investment), potentially accelerating market activity and supporting housing development economics.

• Expanded Developmental Housing: The programme serving families on social security — approximately 3,800 families served in H1 2025 — addresses the lowest-income cohort. Crown Prince Mohammed bin Salman’s SR 1 billion personal donation for Sakan Foundation housing units signals political commitment to this segment.

• Diversified Housing Models: Phase 3 requires expansion beyond ownership-focused housing to include institutional rental stock, affordable rental communities, and mid-market financing instruments that serve families who may not achieve traditional homeownership within the programme’s timeline.

• Regulatory Amendments: The Council of Ministers approved five regulatory amendments to Housing Support Regulations — expanding the beneficiary pool, enhancing eligibility criteria, and increasing product distribution flexibility. The minimum eligibility age reduction from 25 to 20 years opens Sakani to younger families.

• Rent Freeze Extension Potential: REGA indicated that rent freeze measures similar to Riyadh’s could be extended to other cities if needed, subject to Council of Economic and Development Affairs approval. If Jeddah’s 3-6 percent rent growth creates affordability pressure, policy intervention could follow.

Key Performance Metrics Across Phases

Homeownership Rate Trajectory:

• 2016: 47% (baseline)
• 2020: 60% (Phase 1 end — exceeded target)
• 2023: 63.74% (surpassed 63% target)
• 2024: 65.4% (surpassed 2025 target of 65% a year early)
• 2030 target: 70%

Families Served:

• Phase 1 (2017-2020): 834,000+ families, 310,000 occupying new homes
• Phase 2 (2024 alone): 122,000 families, 93,000 moved into homes, 107,000 finance contracts
• Phase 2 (H1 2025): 54,000 families, 48,000 moved into homes, 27,000 subsidised loans

Mortgage Market:

• 2018: ~SAR 200 billion
• 2024: ~SAR 800 billion
• 2025: SAR 951.3 billion
• 2030 target: SAR 1.3 trillion

Housing Supply Institutions:

• Phase 1: Limited institutional delivery; private sector dominant
• Phase 2: NHC SAR 26B revenue, 134K units launched, 62% off-plan share; ROSHN 155,880 planned units
• Phase 3: Combined NHC (600K) + ROSHN (400K) = 1 million-unit institutional target

Analytical Assessment: Will Phase 3 Achieve 70 Percent?

The 4.6-percentage-point gap is achievable but not assured. Several factors favour success: institutional delivery capacity (NHC and ROSHN) is at unprecedented scale; the financial infrastructure (SRC, RMBS, sukuk) provides sustainable capital; the regulatory environment (rent freeze, WLT, foreign ownership) is supportive; and political commitment remains strong.

However, constraints are real. The diminishing returns dynamic means each remaining point requires more effort. Mortgage origination deceleration suggests demand-side friction. Construction capacity across 17 cities simultaneously creates execution risk. And external factors — global rate environment, geopolitical stability, oil price trajectory affecting government fiscal capacity — introduce uncertainty that programme design cannot fully mitigate.

Housing rent inflation at 7.6 percent as of June 2025, villa prices up 7.1 percent, and housing and utilities rising 6.5 percent indicate that affordability pressures are real and ongoing. The residential sector price index falling 2.24 percent during the year to Q4 2025 provides some relief, but the affordability challenge for the remaining cohort is structural rather than cyclical.

The most likely outcome is that Phase 3 achieves significant progress toward 70 percent — perhaps reaching 68 to 69 percent by 2030 — with the final percentage point proving the most difficult. The programme’s institutional architecture, financial commitment, and policy sophistication position it as one of the most capable housing programmes globally, but the distance between 69 percent and 70 percent may represent the difference between serving moderate-readiness families and solving genuine poverty-driven housing exclusion.

For detailed phase analysis, see Housing Program Delivery Phases, Homeownership Trajectory, Affordability Gap Analysis, and Homeownership Tracker.