Algeria to offer loans to aspiring home-owners

28 October 2009

In the wake of last week's housing protests in the capital, the Algerian government has announced it will extend large low-interest loans to less-affluent people.

Hefty financial assistance and slashed interest rates on loans will be made available to low-income people to ease the nation's housing woes, the Algerian government announced on Thursday (October 22nd).

"All Algerian employees, in both the public and private sectors, are targeted by the new measures to receive loans in order to buy housing, at an interest rate as low as 1%," Finance Minister Karim Djoudi told Parliament while making the announcement.

The measures were announced after protests devolved into violence in an Algiers district on October 19th.

Algerians whose income is less than 12,000 dinars a month will be eligible for substantial bank loans, beginning in January 2010. Loans from 4 to 7 million dinars will be available to use for co-op housing, and interest rates on bank loans, currently at 5%, will be proffered on a sliding scale of 1-3%. In addition, state-sponsored real estate companies will offer plots of land at reduced prices.

Funds will also be made available for Algerians who wish to build their own homes in the country. Loans of 7 million dinars will be made available for these ventures, with interest rates ranging from 1 to 3%, depending on income levels.

The cost of these new loans will be covered by the national treasury, said the president of the Association of Banks and Financial Institutes in a statement released on October 11th.

The government is matching its funding measures with furiously-paced construction of new homes. Housing and Urban Development Minister Nour al-Din Musa announced on October 17th that 953,000 residential units had been completed on schedule, while another 580,000 are under construction. Of these, 90,000 units are nearly finished.

"By the end of this year, the one-million-house goal will have been exceeded by around 50,000 units," he said.

Interior Minister Noureddine Yazid Zerhouni urged Algerians to have patience, however, as "the process will require a few weeks or even a few months" to have an effect.

The government was moved to act after protests in the Algiers district of Diyar al-Shams descended into violence on October 19th, after local residents learned that only 1,500 apartments had been allocated for a community of 25,000 residents. Police arrested 15 protesters after security personnel were injured in the unrest, which lasted three days.

Critics of the plan to make housing more readily available and affordable are concerned that it ignores critical parts of the problem.

"The measures ….will be of a limited impact," said the head of the National Union of Real Estate Developers, Larbi Chamane. "The biggest obstacle is the period of time needed by banks to study the [applications for bank loans], which often take a long time."

Public policy expert Kamal Hadef said the local authorities who manage the subsidised housing lists are partly to blame. "[They] generate a sense of frustration and rage among citizens who do not see their names on those lists, and so naturally they take to the streets," he said.

Zubair Othmani, 36, blames the housing crisis for his personal woes. "The housing problem prevented me from realising my dream of getting married," he said, explaining that there was no room in his family house to accommodate a bride.

"Even under the new measures, it is not going to be easy to get a house since I do not have enough money to apply for a bank loan, and even if I did, I wouldn't be able to pay up," he added.

Yet Yazid Bahmad, a 40-year-old doctor, felt optimistic about the changes. "The new government-introduced measures could be the long-awaited answer to my housing problem. I may celebrate the New Year in a new apartment that spares me the trouble of renting, which I've suffered from for the past seven years."

By Walid Ramzi for Magharebia in Algiers © Magharebia.com 2009