Saudi Residential Property real estate market remained under pressure in the second quarter of the year, with property transaction volumes declining sharply despite a modest improvement in overall activity compared to the previous quarter. According to a report by Al Rajhi Capital, one of the Kingdom’s leading financial institutions, market momentum remained subdued, highlighting persistent challenges across the real estate sector.
Residential Demand Remains Weak
Saudi Residential Property transaction volumes in Saudi Arabia fell 21% year-on-year in the second quarter, reflecting softer demand in key urban centers. Riyadh recorded the steepest decline, with transaction volumes dropping 34% compared to the same period last year, underscoring the slowdown in the capital’s housing market.
Other major cities also witnessed weaker activity. Jeddah reported a 16% decline in residential transactions, while Madinah and Makkah experienced decreases of 11% and 8%, respectively. The widespread contraction suggests that buyers continue to adopt a cautious approach despite ongoing economic reforms and housing initiatives.
Al Rajhi Capital noted that although overall transaction volumes improved slightly compared to the first quarter, activity remained relatively weak relative to historical levels.
Land Transactions See Sharper Decline
The slowdown was even more pronounced in the land market. Land transaction volumes plunged 42% year-on-year during the second quarter, reflecting reduced investment activity and softer demand across the sector.
The report highlighted Riyadh as a key contributor to the decline, indicating that lower land sales significantly weighed on the overall market. The slowdown in land transactions points to cautious investor sentiment and a moderation in large-scale real estate investments.
Saudi Residential Property Prices Continue to Rise
Despite weaker transaction volumes, property values continued to show resilience. Saudi Residential Property Price Index increased 1.3% year-on-year in the second quarter, driven primarily by continued strength in the residential segment.
Residential property prices rose 2.6% over the period, offsetting softer pricing in the commercial real estate market. The increase suggests that while fewer transactions are taking place, underlying demand for quality residential assets and limited supply in certain locations continue to support pricing.
Market Outlook
The latest figures highlight a Saudi Residential Property real estate market navigating a period of adjustment. While transaction activity remains below last year’s levels, the continued rise in residential property prices points to underlying market resilience. Going forward, investors and developers will closely monitor demand trends, financing conditions, and the impact of ongoing government housing and economic diversification initiatives, which are expected to play a crucial role in shaping the sector’s recovery in the coming quarters.
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