Real estate activity in Saudi Arabia begins 2023, with a record weekly decline of 53.7%

The local real estate market in Saudi Arabia started its activity during the first week of the new year with a record weekly decline, reaching 53.7%, compared to its decline during the last week of last year by 1.8%, and the total value of market transactions settled at the end of the week at a level below 2.1. billion riyals. ‏

The decline in real estate activity included all the main sectors of the market, as the value of deals in the residential sector decreased for the same week by 47.5%, and it decreased for the commercial sector by a record rate of 72.2%, and it decreased for the agricultural and industrial sectors by 22.7%.

These results came after the weekly contraction of the “N1” liquidity supply by 0.75%, and the “N3” liquidity supply by 0.23%, while the “N2” liquidity supply recorded a weekly increase of 0.11%, which coincided with the continued increase in the interest rate on loans between local banks. For a period of three months at its highest historical levels in about 22 years, and the rate recorded an increase early last week by about 0.134 basis points, stable at 5.34%, which in turn led to a decrease in the volume of real estate loans and their flows into the real estate market, due to the high cost of mortgages. , which reached its levels recently in more than two decades, and this will certainly contribute to increasing pressure on the activity of the real estate market, and reduce the purchasing power of various real estate assets, which are settling during the current period at record price levels., according to Al-Eqtisadiah newspaper. .

The real estate market, like the rest of the markets, is going through a path facing weak liquidity flows to its various main sectors, as a result of the high interest rates “mortgages”, and the subjection of evaluations of various real estate assets to review by all parties, both investors and consumers, especially after the wave of rises The record achieved by the market over the past four years, in addition to studying the expectations related to the global economy and increasing the possibility of it entering a recession by the middle of this year, and the continuation of central banks around the world in the monetary tightening policies that they started at the end of the first quarter of last year, and are still valid. effect to date, and it is expected to continue with those strict policies until the middle or end of next year, according to statements issued by the US Federal Reserve, and most central banks around the world tracking the impact of those policies aimed at curbing the inflation rate, and returning it to its normal levels at 2.0% or less

The value of the residential sector deals recorded a record weekly decline of 47.5%, compared to its increase during the previous week by 19.0%, and stabilized as a result of these developments at below the level of 1.4 billion riyals, “66.1%” of the total value of weekly transactions in the real estate market. The value of commercial sector deals decreased for the second week in a row by 72.2%, compared to a decrease during the previous week of 20.8%, and subsequently stabilized at the level of 0.4 billion riyals, “20.2%” of the total value of weekly transactions in the real estate market, and the total value of real estate market also decreased. Deals in the agricultural and industrial sectors decreased for the third week in a row by 22.7%, compared to a decrease of 21.9% during the previous week, and settled at 284 million riyals, “13.7%” of the total value of weekly deals in the real estate market. ‏

As for the weekly performance level for the rest of the other indicators of the local real estate market, the number of real estate transactions recorded a record weekly decline of 38.3%, compared to its rise during the previous week by 2.8%. Number of deals in all major sectors of the market. The number of properties sold decreased by a record rate of 40.1%, compared to its increase during the previous week by 4.6%, and the weekly sales volume of the market stabilized at a level below 2.2 thousand sold properties, and the decline in sales included all the main sectors of the market.

The total area of ​​real estate transactions executed during the week decreased for the second week in a row, by 34.1%, compared to a decrease of 16.8% during the previous week. It affected all major sectors, with the exception of the residential sector, whose area recorded a slight weekly increase of 0.9%, compared to a decrease in the commercial sector by 61.1%, and a decrease in the agricultural and industrial sectors by 34.4%.