Saudi Arabia's residential market remained under pressure in the first half of 2019 as a rising affordability challenge and the lack of suitable supply for middle and lower tier buyers continued to weigh, according to new research.
Consultancy Knight Frank said, however, that transaction volumes in key Saudi cities have picked up significantly, indicating that the market may be heading towards the bottom of its cycle.
On an annual basis, it said the price of Riyadh apartments have fallen by 6 percent, while villa values have slipped 2 percent. In Jeddah, that decline is more pronounced at 8 percent and 5 percent respectively.
With a growing urban population and a mismatch in the provision of housing stock to low and middle tier buyers, housing affordability in Saudi Arabia is a rising challenge, Knight Frank said in a report.
It added that despite challenging market conditions, various government initiatives aimed at boosting Saudi home ownership and government focus on the real estate sector as part of the economic diversification process is encouraging.
The Sakani scheme has been put in place to tackle the rising affordability challenge and is driving substantial construction activity in the market.
The main target of the government is to increase Saudi home ownership to 52 percent by 2020 and 70 percent by 2030.
"Drivers for the residential market appear to be more positive for the longer term as we expect the housing market to remain supported by government efforts to boost home ownership among Saudis, the focus on the real estate sector as part of the diversification process and various urban regeneration initiatives," the report noted.
Raya Majdalani, research manager at Knight Frank said: “The residential market remains under pressure as the rising affordability challenge and the lack of suitable supply for middle and lower tier buyers continue to weigh on the sector. In H1 2019 we have seen as significant pick up in transaction volumes across key cities which indicates that the market may be heading towards the bottom of its cycle.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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