In a recent industry report, Saudi Arabia’s housing market continued to show resilience, achieving an impressive SAR45.9 billion ($12.23 billion) worth of transactions in the third quarter of 2023.
The report by Coldwell Banker Richard Ellis (CBRE) also revealed that the total number of transactions recorded reached 61,473 transactions.
Prices surge across cities
CBRE’s study showed a noteworthy surge in apartment prices, particularly in the capital city. Riyadh experienced a significant growth of 16.1 percent, with average apartment prices reaching SAR4,780 per square meter. This reflects the robust market demand in the capital.
Meanwhile, Alkhobar and Dammam also witnessed positive trends in apartment prices. However, Jeddah surprisingly faced a downturn. Alkhobar saw a 2.9 percent increase, reaching SAR3,424 per square meter. Moreover, Dammam experienced a 2.4 percent rise, standing at SAR2,862 per sq. meter. In contrast, Jeddah’s average apartment prices plummeted by 9.5 percent, hitting SAR3,872.
A market of contrasts
Taimur Khan, head of Middle East Research at CBRE, provided insights into the contrasting dynamics in the Saudi housing market. He stated: “With the exception of Jeddah, Saudi Arabia’s residential market posted yearly price increases in all tracked cities in Q3 2023 across both the villa and apartment segments.”
“These performances were achieved despite a fall in residential transactions, which stemmed from high-interest rates and as buyers continue to adopt a wait-and-see approach in anticipation of new quality stock which is set to be delivered in the short to medium term”, he added.
Mixed fortunes in the housing market
In the villa segment, Riyadh, Dammam, and Alkhobar showed positive growth. Riyadh experienced a 1.2 percent year-on-year increase, reaching SAR5,615 per square meter. Meanwhile, Dammam saw a 1.8 percent growth, registering average prices of SAR3,565 per square meter. On the other hand, Alkhobar saw a 3.2 percent growth, registering average prices of SAR3,612 per square meter. Jeddah’s villa segment, however, contracted by 3 percent, with average prices at SAR5,411 per square meter.
Read: Saudi office rents increase, Riyadh leads with a 24 percent spike
Market challenges
Despite the overall positive trends, the report highlighted a 7 percent decrease in the total number of transactions. Additionally, the report recorded an 11.3 percent reduction in the total value of residential property transactions. That is compared to the same period in 2022.
The report also revealed a significant decline of 37.5 percent in the total number of mortgage contracts in the third quarter of 2023. Single-family homes dominated lending, constituting 69.8 percent of the total value. Apartments follow single-family homes at 24.8 percent and land at 5.4 percent.
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