Apartment prices in Saudi Arabia’s capital Riyadh have shot up by 20 percent on average in the last 12 months, according to an analysis by property consultant Knight Frank.
Villa prices went up by 18.6 percent during that time. The increase in prices has led to a drop in transactions, suggesting that homebuyers are struggling to afford new properties.
The number of property deals in the year to Q1 of 2022 fell by 27 percent, the company said in a statement.
With the rising prices, this reflected a drop in deal values of two percent to $10.7 billion (40.4 billion riyals).
Meanwhile in Jeddah, apartment prices increased by 4.9 percent in 12 months, while villa prices rose by 1.2 percent.
The number of residential transactions also increased by five percent, representing a 46 percent increase in the value of sales.
Prices of apartments in the Dammam metropolitan area increased by an average of 6.1 percent over the year, while average villa prices went up by 2.5 percent.
Demand in the eastern city also plummeted by 32 percent, representing a 18 percent drop in the value of transactions.
“The spectacular house price growth in the Kingdom mirrors what we are seeing around the world,” said Faisal Durrani, Head of Middle East Research at Knight Frank in a statement.
“However, in Saudi Arabia, the government’s programs to boost home ownership have turbo-charged demand, development activity and house prices,” he added.
The Riyadh market is increasingly turning to rental properties as job opportunities increase and the population becomes more transient, Knight Frank said.
The Saudi government is undertaking major real estate developments in order to support the housing needs of its population.
In 2017 it launched Roshn, a publicly-owned developer tasked with building suitable housing.
On Monday, May 23 Roshn announced that it was building 18,000 units north of Jeddah over four million square meters.
Roshn also plans new developments in Riyadh, Mecca, Asir, the Eastern Region, and al-Kharj.
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