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Rising home prices in Saudi Arabia are putting downward pressure on property transactions in the kingdom, according to a new JLL report.
Residential property sale prices in the Gulf state increased in the second quarter of the year, with units in Riyadh posting a 7% gain and Jeddah registering a 5% increase.
However, higher sale prices and interest rates are starting to discourage some buyers.
According to JLL’s research, the kingdom has recently seen a decline in demand for villas and flats in two of the kingdom’s major markets.
“The increased prices and high interest rates in the residential market have started to deter buyers and have added downward pressure on transactions,” JLL said.
Decline in transactions
During the first five months of 2023, the total number of sale transactions for villas and apartments dropped by 2% in the capital and 17% in Jeddah, JLL said, quoting data from the Real Estate General Authority.
As for the total value of property deals, Riyadh saw a 4% decline, while Jeddah witnessed a significant drop of 19% when compared to the same period last year.
More Saudi citizens have opted to invest in residential properties in recent times. As of the latest estimate, home ownership in the kingdom increased to 67%, almost hitting the government’s goal of 70% by 2030.
The Saudi residential stock has also gone up, with around 8,000 units completed in Riyadh, pushing the existing stock to 1.4 million units.
In Jeddah, around 4,000 units were handed over, bringing the stock to 871,000 units.
As for upcoming supply, Riyadh can expect close to 16,000 units by the end of the year, while Jeddah will see approximately 15,000 additional units.
(Writing by Cleofe Maceda; editing by Seban Scaria)
