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Saudi Arabia saw residential transactions decline 16% during 2023

In 2023, Saudi Arabia witnessed a decline in real estate transactions and mortgage issuance

Saudi Arabia

In 2023, there was a decline in the overall number of real estate transactions in Saudi Arabia. The total volume of transactions decreased by 17%, reaching slightly over 177,000. Similarly, the total value of all deals dropped by 9% to approximately USD 52.72 billion (SAR 197.7bn) during the same time period.

Residential transactions, which made up the majority of real estate deals at 58.7% of the total value, also experienced a decline. The number of residential deals fell by 16% to just under 150,000 sales. This can be attributed to various factors such as rising house prices, affordability challenges, and a shift in demand as younger Saudis choose renting over buying a home, elaborated Knight Frank’s Winter 2023/24 Saudi Residential Market Review report.

Moreover, the number of mortgages issued between January and November 2023 dropped by 35%, which is a bigger decline compared to last year’s decrease of 22%. In a similar trend, the total value of mortgages issued decreased by 36% to approximately USD 19.79 billion (SAR 74.2bn) during the same period. This decline can be attributed to higher interest rates and prices, which have caused potential buyers to delay purchasing homes as they save up larger amounts for down payments.

Faisal Durrani, Partner – Head of Research, MENA, says, “The residential market has experienced phenomenal price growth over the last two to three years, with prices in Riyadh, for instance, continuing to climb into record-high territory. Unsurprisingly, the high home values have contributed to growing affordability issues, which have been further exacerbated by the rising cost of borrowing. Indeed, interest rates have jumped from around 0.8% in January 2021 to 6% at the end of last year.

He further adds, “A further complication in the housing market is the structural shift in demand. Younger Saudi’s are delaying home ownership not only due to affordability considerations, but intra-Saudi migrants are preferentially seeking to rent, rather than own. The impetus to introduce build-to-rent stock, managed to an international standard remains a tremendous market opportunity.”


Unlike the rest of the Kingdom, Riyadh stands out from the pack, with transaction volumes rising by 7% last year, compared to a -21% fall in Jeddah and a -12% decline in the Dammam Metropolitan Area. A growing population in the capital, coupled with increasing urban migration is supporting heightened demand for housing. Despite this, the total value of residential transactions in Riyadh has only risen by 1% during 2023 to approximately USD 13.56 billion (SAR 50.9bn), hinting at a rapid tapering of the strong price growth registered over the last two to three years.

While average apartment prices climbed to a new record high of SAR 5,250 psm, equating to a year-on-year rise of 4.5%, prices during Q4 only increased by 2%. However, this performance has not been uniform, with apartment prices in northern districts such as As Sahafah (23%) and An Nakhil (13%) climbing at a faster rate during 2023 to reach SAR 7,744 psm and SAR 7,785 psm, respectively. Similarly, in Al Malqa prices stand at an average of SAR 9,200 psm, equating to a rise of 14.5% over the last 12 months.

In contrast, villa prices have risen by a more modest 0.5% during 2023 to an average of approximately USD 1,325 (SAR 4,970) psm by the end of the year. Some districts like Al Uraijah (-14%) and Al Hamra (-13%) experienced sharp corrections during the year, with prices settling at approximately USD 637 (SAR 2,390) psm and approximately USD 1,490 (SAR 5,590) psm, respectively. Northern areas such as Al Malqa (USD 2,400/SAR 9,140 psm) and Al Irqah (USD 1,500/SAR 5,980 psm) have mirrored the performance of prices for apartments, growing by 12% and 7%, respectively.

Over the medium to long term, the government’s vision to turn Riyadh into a new financial hub for the Kingdom and region is expected to drive up homeownership demand levels. The capital anticipates its population to double to nearly 16 million by 2030 and even with 241,000 homes expected to be completed between now and then, we forecast a shortfall of 1.5 million homes.


The number of residential transactions registered across Jeddah saw a double-digit decline of -21%, dropping from 23,990 deals in 2022 to 18,897 in 2023. In addition, the value of transactions declined at a rate of -26% during the same period to the end of 2023 at approximately USD 5.57 billion (SAR 20.9bn).

Average villa prices in Jeddah fell marginally by -2.5% during 2023 to approximately USD 1,356 (SAR 5,085) psm. Q4 2023 alone registered a decrease of 1% in villa values. Villa prices in Ash Shati (approximately USD 2,288/SAR 8,580 psm) and Al-Khaldiyah (approximately USD 1,968/SAR 7,380 psm) remain the highest in the city, and are now 3% and 7%, higher than at the end of 2022, respectively. Meanwhile, for more affordable villa locations like Al-Kausar (approximately USD 832/SAR 3,123 psm) and Al-Sanabal (approximately USD 699/SAR 2,623 psm), the annual rate of decline has been stronger at -15% and -20%, respectively.

Elsewhere, apartment prices dropped by -2% in 2023, ending the year at USD 1,100 (SAR 4,150) psm. The average price for apartments across the city ranges from USD 1,699 (SAR 6,370) psm in districts like Obhur Al Junubiyah, to USD 936 (SAR 3,510) psm in Al Safa.

The current supply of residential units stands at 891,500 units, representing a 1.8% increase compared to 2022. It is anticipated that by 2026, the market will have grown by 4% due to the addition of almost 55,000 new units.

Dammam Metropolitan Area (DMA)

Echoing Jeddah’s residential market, the Dammam Metropolitan Area (DMA) registered apartment price falls of -0.5% over the last 12 months, while villa rates slipped by -2.5%. Unsurprisingly, both the value and number of residential transactions recorded an annual decline in the DMA in 2023. The total number of transactions decreased from 9,500 in 2022 to 8,366 in 2023, representing a 12% decline. The total value of transactions dropped by 23% during the same period to approximately USD 2.69 billion (SAR 10.1bn).

The existing residential supply in DMA stands at 364,000 units. Looking ahead, we forecast this figure to increase by 7% by the end of 2026, which translates into 8,630 new completions between now and then.

Yazeed Hijazi, Associate Partner – Co-Head of Real Estate Strategy & Consulting, based in Knight Frank’s Jeddah office, concludes, “The decreasing number of transactions is affecting the value of transactions throughout the kingdom, with the main reason being an increase in interest rates, which is leading to affordability issues. The government is working on ways to revive demand in Jeddah through new large-scale real estate and infrastructure projects, which are expected to boost job creation rates and housing demand levels in the medium to long term.”