Early impact of Covid-19 on private sector employees finance homeownership in Kingdom of Saudi Arabia

For almost two years, the economic shocks and financial uncertainty created by the Covid-19 pandemic have affected all sectors. The private sector employees may be the worst hit. This is because of the lockdown across many countries, including the Kingdom of Saudi Arabia (KSA), leading to income irregularities. Studies exploring private-sector employees concerning housing finance for the houses purchased and how the lockdown has affected their sources of income for repayment plans are scarce. Therefore, this study aims to investigate the possible early negative impacts of Covid-19 on private sector employees’ housing finance homeownership in KSA.

A phenomenology type of qualitative research was used. Data were sourced from three cities (Riyadh, Al-Qassim and Medina) and three mortgage banks across KSA. Virtual interviews via Zoom and WhatsApp video calls were conducted with engaged participants (bankers, government agencies and private sector employees). Thematic analysis was adopted, and the analysed data was presented in themes.

Findings show that the partial and full lockdown resulted in income irregularities in many private businesses. Also, findings identified downsizing, leading to large-scale unemployment, half-monthly income for employees, loss of profit, human resources wastage, etc. Findings reveal that because of the economic shock, many homeowners have not been able to meet up with their monthly mortgage repayment obligation. Also, the absence of financial support in form of socioeconomic needs has not helped the matter.

The paper is limited to the early negative impacts of Covid-19 on private sector employees’ housing finance homeownership in KSA and data collected via Zoom and WhatsApp video calls across the three main cities. The recommendations that will emerge from this study may be adopted by other Gulf and Islamic countries with similar homeownership repayment challenges.

This study would stir key stakeholders, especially the policymakers and mortgage institutions to consider future policy principles that focus on who is at the highest risk for housing-related hardships because of the Covid-19 or future pandemic. The outcome can be used to develop an equitable housing policy framework to foster long-term economic mobility and be validated in the future by scholars.

Similar research in this area is limited, which makes this study one of the pioneering attempts to investigate the early negative impacts of Covid-19 on private sector employees’ housing finance homeownership in KSA. The paper sheds light on the emerged early negative impacts and proffer feasible possible solutions to promote homeownership amongst Saudi citizens.