According to a report by JLL, rising home prices in Saudi Arabia are causing a decline in property transactions in the country.
The report states that residential property sale prices in the second quarter of the year increased, with Riyadh seeing a 7% gain and Jeddah registering a 5% increase. However, these higher prices and interest rates are starting to discourage buyers.
The report also highlights a decline in demand for villas and flats in the major markets of Riyadh and Jeddah.
The total number of sale transactions for villas and apartments dropped by 2% in Riyadh and 17% in Jeddah during the first five months of 2023.
The total value of property deals also saw a decline, with Riyadh experiencing a 4% drop and Jeddah witnessing a significant drop of 19% compared to the same period last year.
Despite the decline in transactions, more Saudi citizens are investing in residential properties, with home ownership in the kingdom increasing to 67%. The government’s goal is to reach 70% home ownership by 2030.
The residential stock in Saudi Arabia has also increased, with around 8,000 units completed in Riyadh and 4,000 units in Jeddah.
The upcoming supply is expected to add close to 16,000 units in Riyadh and approximately 15,000 units in Jeddah by the end of the year.
To boost the property sector in the kingdom, the Saudi Minister of Justice, Dr. Walid AlSamaani, has launched the Real Estate Market platform.
This new website aims to provide reliable and up-to-date information about the real estate sector, facilitate real estate transactions, and offer various e-services for property owners and buyers. The platform will also benefit investors and portfolio managers.
In addition, the Saudi Ministry of Municipal and Rural Affairs and Housing has announced new penalties for various municipal violations.
Trespassing on public property and stealing electricity from lighting poles will result in penalties ranging from SAR 10,000 to SAR 50,000. Establishments that raise prices above the fixed levels set by the Minister of Commerce will also be penalized.
The penalty will consist of the difference between the standard price and the selling price, plus a fine of between SAR 5,000 and SAR 100,000.
The Ministry of Commerce has also amended regulations governing construction work, imposing fines ranging from SAR 10,000 to SAR 50,000 for establishments that begin construction work without a license.
These updated regulations regarding the real estate industry aim to promote small and medium enterprises (SMEs) by creating a more favorable operating environment for them.
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The real estate regulations also aim to protect the rights of all parties involved in commercial activities. It may also improve the quality of life and the urban landscape.
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