Saudi Arabia's cabinet has approved a proposal to tax undeveloped land in urban areas, a policy that could help to end a shortage of affordable homes and spur economic growth.

The cabinet told a council of top economic officials to prepare a mechanism for the tax, saying the matter was urgent, state news agency SPA reported on Monday.

Much urban land in the kingdom is owned by wealthy individuals or companies who prefer holding it as a store of value, or trading it for speculative profits, to the process of developing it.

The tax could change that and spur home building activity.

The SPA report gave no details of the size of the tax, how it would be implemented, or a timetable for introducing it.-Reuters