Home purchase in nascent mortgage markets: Determinants of who borrows and who pay cash in Cairo

Realizing the dream of owning a home

“…Hughes (2004) has earlier also reported that cash is preferred for everyday transactions in Saudi Arabia. Although, installment sales have firmly been established as the largest source of credit in Egypt, a sister MENA country (Struyk and Roman, 2008), it is not the most preferred financing option in Saudi Arabia. The low percentages for this option and others can either be due to a general dislike for them or inaccessibility.…”

“…pure cash purchase (Struyk and Roman, 2008). As this study has brought up the importance of cash purchase in Saudi Arabia, it would be worthwhile to conduct studies in similar environments with the view to ascertaining the widespread nature or otherwise of this financing option.…”

“…In urban areas, the probability of accessing formal finance rises steadily with income. As a result, savings or short‐term borrowing has often been the dominant path to owning a unit of minimum acceptable quality in developing countries (Struyk and Roman, 2008). Others include family savings, selling of assets, and loans from individual moneylenders (Udechukwu, 2008).…”

“…LaCour‐Little (2007) also reported that individual credit characteristics, financial factors and pricing generally drive product choice. In examining the broad pattern of home purchase finance in the Greater Cairo area, Struyk and Roman (2008) conclude that the likelihood of paying all‐cash by potential home buyers is declining at a decreasing rate. They added that those purchasing a new unit are 26 percent more likely to pay in installments.…”

“…The other is the choice among alternative financing options. In this regard, studies on choice among alternatives have been conducted in Jordan (Struyk et al , 1989), Korean and Philippines (Struyk and Turner, 1986) and Egypt (Struyk and Roman, 2008). However, the present study adds to the sparse literature on both dimensions.…”