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Home ownership aspirations have slipped further in Saudi Arabia, with potential buyers putting off purchase plans due to the high borrowing costs.
In a Knight Frank survey of more than 1,000 respondents, nearly seven in 10 (67%) of Saudi nationals who bring home more than SAR 50,000 ($13,000) each month said that high interest rates are a major hurdle to their purchase plans.
The real estate consultancy also found that there has been a decline in the number of tenants who are in the market for a house purchase.
Among Saudi nationals who are renting a home, only 29% have plans to enter the housing market this year, compared to 84% who said the same thing in 2022.
Overall, just about a third of Saudi nationals and expatriates living in the kingdom have expressed plans to buy a home this year.
“A high interest rate environment and rampant house price growth across the kingdom over the last five years, particularly in cities such as Riyadh, has impacted the housing market,” Knight Frank said.
While high purchase costs have turned off potential buyers, Saudi’s real estate market overall continues to see growth, with the total number of residential transactions rising by 38% to more than 202,000 sales. The value of deals in the residential segment of the market also rose by 35% to SAR 164.8 billion.
Saudi Arabia’s central bank cut its repo rate by 25 basis points to 5% in December 2024, following the US Federal Reserve’s latest policy adjustment.
(Writing by Cleofe Maceda; editing by Seban Scaria)
