RIYADH: House prices in Riyadh are skyrocketing at their fastest pace in five years, as apartment prices witnessed a growth of 20 percent in the last 12 months, according to recent research carried out by Knight Frank.
“This significant growth is not without its consequences. Demand is showing signs of being stymied as households find themselves needing to save for longer before being able to transition to home ownership. The resultant impact is a decline in deal numbers, which fell by 27 percent in the last 12 months,” said Faisal Durrani, partner – head of Middle East Research at Knight Frank.
The prices of villas in Riyadh have increased by 18.6 percent in the same period, according to the report.
The research report also revealed that transaction volumes across Saudi Arabia fell to 60,000 during the first quarter. The total deal values, however, only dipped 2 percent to SR40.4 billion ($10.6 billion).
Residential transactions up 46 percent in Jeddah
The number of residential transactions in Jeddah increased by 5 percent in the last 12 months, while the total value of residential sales increased by 46 percent over the same period.
Mirroring Riyadh, Jeddah also witnessed a rise in house prices in the last 12 months. Apartment prices in Jeddah increased by 4.9 percent in the first quarter compared to the same period last year, while villa prices rose by 1.2 percent over the same period, the report revealed.
Knight Frank revealed that this rise in prices could be the result of numerous government and private sector entities, like ROSHN, Upton Jeddah, Al Ballad Development, and Jeddah Central, establishing their offices in the city. This eventually makes Saudi nationals and expatriates return to Jeddah, underpinning the demand for homes, it added.
Dammam deal volumes fall 32 percent
Dammam metropolitan area also witnessed a profound price increase, as average apartment prices increased by 6.1 percent in the first quarter, while average villa prices increased by 2.5 percent over the same period last year, Knight Frank’s research revealed.
“Anecdotal evidence of increased rates of job creation fueled by rising oil prices in the Kingdom’s oil-producing heartland are underpinning rising demand for homes in the DMA, which is, in turn, helping to lift home values,” added Durrani.
The DMA’s residential market, however, experienced a 32 percent decline in the volume of deals over the last 12 months, while the total value of residential transactions decreased by 18 percent over the same period.