Arab News, Tuesday, Nov 29, 2022 | Jamadi Al Awwal 5, 1444
Rising Riyadh home prices push deals value up 6% but volume falls
Saudi Arabia: As
residential prices continue to rise in Saudi Arabia’s cities, the total
transaction value of houses in the Kingdom has increased by 6 percent compared
to this time last year, the latest report from global property consultancy firm
Knight Frank showed.
The average apartment value has spiked as high as
30 percent in Riyadh over the last 12 months, with some of the well-located
suburbs in northern parts of the city seeing rises over 40 percent, as the
shortage in housing supply continues to play havoc on prices.
This resulted in the number of housing deals
slipping, with the volume of home sales this year falling by 24 percent,
according to Knight Frank.
“The affordability gulf between buyer expectations
and the significant house price increases registered in cities across the
Kingdom is underpinning the slowing in the number of home sales,” said Faisal
Durrani, partner – head of Middle East Research at Knight Frank.
Despite a strong pipeline of around 200,000 new
homes for the capital by 2030, he said price growth remains on a sharp upward
trajectory.
As a result, the total volume of homes sold in the
capital dipped by 30 percent in the year to the third quarter of 2022 attaining
7, 7750 transactions in comparison to the last year’s transactions of 11,074.
According to Knight Frank’s estimates, Riyadh is
expected to face a housing supply deficit when factoring in the expected spike
in population to 17 million by 2030, from 7.5 million today.
“To exacerbate matters, anecdotal evidence
suggests some sellers are opting to lease their inventory to take advantage of
the influx of domestic and international migrants being drawn to the city for
work, which is further eroding the sales supply,” explained Durrani.
As business activity is rising in Riyadh, more
people flock to the city for employment, driving demand for office spaces and
houses while supply still catches up.
The employment level in Riyadh is projected to
increase by around 5 percent by the end of 2022, with a further rise of 3
percent in 2023, according to Oxford Economics.
The residential sector in the other major city
Jeddah witnessed similar trends as average apartment and villa prices grew at 6
percent and 3 percent respectively during the third quarter of 2022, according
to Knight Frank.
The number of home sales too in Jeddah saw a
decline of 19 percent, falling to 3,711 deals, in the year to the third
quarter.
Despite this, Knight Frank noted that the value of
transactions increased by 30 percent during the same period.