At a time when the global economy is grappling with strong waves of price pressures caused by the Iran war and disruption in the Strait of Hormuz, Saudi Arabia has managed to chart a different course.
Inflation continued to slow, settling at one of the lowest levels globally, supported by stable rents and regulatory measures to balance supply and demand.
The performance reflected the effectiveness of preemptive government measures and fiscal and monetary policies that helped shield the domestic market from the repercussions of geopolitical crises and global supply chain disruptions.
The latest official data showed that annual inflation slowed to 1.7% in April, according to the General Authority for Statistics.
The Ministry of Finance expects inflation in the Kingdom to slow to around 2% in 2026, compared with 2.3% in 2025.
The slowdown was supported by a slower rise in the cost of housing, water, electricity, gas, and other fuels, which increased by 3.8% compared with previous levels.
The stabilization of actual housing rents at 4.8% for the second month in a row also indicates that the market has begun to absorb regulatory measures. This raises an urgent question in economic circles over whether the Kingdom has already entered a phase of sustainable rent containment.
Experts say this stability could pave the way for further declines in the near term, especially after the approval of the executive regulations on fees for vacant properties, which aim to improve the efficiency of the real estate system and achieve a balance between supply and demand.
The fees are expected to increase real estate supply, which would in turn help lower prices and reduce them at the broader level across the Kingdom, strengthening its position as one of the G20 economies most capable of curbing price pressures.
The government has intensified its efforts to lower real estate prices and continues to do so.
This has come under the directives of Crown Prince and Prime Minister Prince Mohammed bin Salman, who ordered a number of measures to address the issue and bring balance to the real estate sector, after the system, particularly in the capital Riyadh, saw a wave of increases in land prices and rents in recent years.
Data details
Prices in the housing, water, electricity, gas, and fuels group, the second most influential category in inflation, slowed to 3.8% year on year in April, compared with 3.9% in March, recording the lowest rate of increase since the start of the year.
Inflation in actual housing rents also stabilized for the second month in a row at 4.8%, also the lowest rate of increase since the start of 2026.
Monthly comparison
On a monthly basis, the Consumer Price Index rose 0.2% compared with March, as prices increased for food and beverages, housing, and energy. In contrast, stable transport prices and declines in some furniture and clothing items helped limit the acceleration in inflation, keeping rates within moderate levels compared with regional and global markets.
Food and beverage prices, the largest group by weight in the consumer price basket, accelerated to 0.6% in April from 0.3% in March, mainly driven by higher food prices.
Transport prices rose 1% year on year, a slowdown from the previous month and the second-lowest rate of increase since the beginning of the year, helping limit the rise in overall inflation.
Real estate experts told Asharq Al-Awsat that government measures affecting the real estate sector would lower prices, which would, in turn, gradually reduce inflation in Saudi Arabia in the coming period. They said the housing, water, electricity, gas, and fuels group carries significant weight in the inflation rate.
Curbing monopoly
Dr. Osama bin Ghanem Al-Obaidy, an adviser and professor of international commercial law, attributed the slowdown to the stabilization of housing rents, especially after the approval of regulations imposing annual fees of up to 5% of the building’s value on vacant properties.
He said the executive regulations would encourage owners to use their vacant properties and put them on the market, increasing supply and lowering rental prices, thereby affecting real estate inflation by creating a balance between supply and demand.
He said the new regulations followed a series of government measures, including fees on undeveloped urban land, regulation of undeveloped plots, a five-year rent freeze, the development of large housing projects, and incentives for developers to increase real estate supply.
These efforts aim to achieve a more sustainable balance between supply and demand, leading to a further reduction in real estate inflation and, subsequently, a decline in the overall inflation rate.
Larger decline in rents
Economic expert Ahmed Al-Shihri said the slowdown in Saudi Arabia’s annual inflation rate was supported by the stabilization of actual housing rents. He said government moves related to the real estate system had helped calm the pace of increases in housing costs.
Al-Shihri said the decline coincided with the approval of the executive regulations for fees on vacant properties, aimed at boosting real estate supply and encouraging owners of unused units to inject them into the market.
He expected the move to contribute to a larger, gradual decline in rental prices in the coming period, once a better balance between supply and demand is achieved. This would ease pressure on rental prices and strengthen the housing market's stability, potentially supporting the continued slowdown in inflation to low levels compared with several regional and global economies.
He said real estate prices are among the groups with the greatest impact on inflation, meaning that a decline in the sector across the Kingdom would help gradually lower the rate in the coming period.
In conclusion, the data and accelerating legislative moves show that the Kingdom is not merely monitoring inflation indicators but is proactively addressing the roots of price challenges, especially in the real estate sector, which directly affects citizens’ quality of life.
With the executive regulations on fees for vacant properties entering into force and integrated with housing programs and increased supply, the Saudi economy appears to be moving steadily toward consolidating a phase of sustainable price stability. This enhances the appeal of the investment environment and supports households’ long-term financial planning.
