The value of real estate transactions in Saudi Arabia has declined by 32% in a week due to the contraction in the housing sector, which has been significantly affected by the record drop in land and villa transaction values.
This has led to a decrease in transaction values to historically low levels, driven by the persistently high mortgage interest rates.
The Saudi real estate stock market index remained stable at 10,014 points last week, keeping the total value of real estate transactions at SAR 5 billion (approximately $1.3 billion).
This resulted in a 6.9% decrease in the overall number of real estate transactions to 5,100 transactions.
In an interview with Asharq Al-Awsat, Ahmed Al-Drees, the general manager at “Al-Mustaqbal” real estate construction company, pointed out that the main aim is to lower prices to make them more accessible to everyone.
The market has recently seen a slight decline in prices, which may be a precursor to a more substantial market downturn.
The cumulative decrease in transaction values will lead to price reductions, especially for investors looking to exit the market or those whose financial capacity has been affected by the recession, particularly those tied to previous financing contracts or facilities.
Al-Drees also believes that mortgage loans are no longer beneficial in the face of rising interest rates, emphasizing that the essence of the problem lies in the excessive increase in property values beyond the reach of a significant portion of aspiring property owners.
This is evident in the noticeable decrease in launching advanced real estate projects, which have significantly declined due to the market conditions.
Al-Drees pointed out that current real estate marketing campaigns are more focused on selling existing properties rather than launching new projects.
Over the past decade, the total market value of traded properties has reached approximately SAR 1.43 trillion (approximately $381 billion).
Within the local real estate market activity, the overall weekly value of real estate transactions has witnessed a 32% decline, influenced by the downturn in all major market sectors, particularly the housing sector.
