Assessing rental housing affordability in Saudi Arabia: a potential tenant-based approach

Purpose: This paper contributes to the ongoing debate on housing affordability as a complex issue with considerable social and economic implications within the broad context of achieving Target 1 of the UN Sustainable Development Goal (SDG) 11. This research highlights key issues and challenges related to housing affordability and access in Saudi Arabia. Central to the analysis is understanding the needs and property accessibility challenges expatriates face. This demographic, referred to as potential tenants (PTs), tends to cluster in the rental market with limited options for property ownership and long-term mortgages. Design/methodology/approach: The study uses empirical investigation to analyze the complexities of the rental housing market in major Saudi cities and suggests a two-step analysis. The initial phase involves exploratory analysis to uncover the housing market’s key determinants and evaluate its stress level. The second phase assesses rental housing affordability (RHA) via a blended ratio and residual method. Findings: The findings highlight regional disparities and a fluctuating rental housing sector and reveal other aspects of housing stress, such as PTs’ difficulties affording rental housing, often their primary housing option. Despite a relative improvement in rental prices from 2020 to 2023, findings indicate that the rental market in Saudi Arabia remains unattainable for prospective renters. The study concludes by reflecting on the policy implications of these findings, framed around the central notion of PTs. Practical implications: This study builds on previous research by addressing the challenges expatriates face in accessing the rental market. It aims to empirically measure the extent of these challenges, enhancing our understanding of the barriers to securing affordable housing, ultimately, seeking to inform the development of effective policies that address the diverse needs of this population. Social implications: This study promotes equality by focusing on the rental market dynamics from the perspective of the would-be tenant group of non-Saudi expatriates, a group of home seekers vulnerable in many respects and with limited opportunities to access property. Originality/value: This study contributes valuable information on housing affordability in Saudi Arabia by refining the analysis and distinguishing between two groups of home seekers: PTs and potential owners. This approach has not been previously explored.