Residential sale prices fell in Riyadh and Jeddah during the third quarter of 2015, driven primarily by the more restrictive mortgage regulations issued last November, according to a new report.
JLL’s latest report said approximately 4,000 units were completed during the third quarter, bringing the total supply to 984,000 units.
Sale prices for villas and apartments declined in line with a 10 percent decrease in residential transactions during Q3.
JLL said the new mortgage regulations continue to negatively impact the sales market as citizens struggle to find the 30 percent down payment required by lenders to be eligible for a mortgage.
It added that rents continued to increase across the board, as demand remains strong for rental property.
Jamil Ghaznawi, country head of JLL Saudi Arabia, said: “The Riyadh real estate market has maintained a steady performance this quarter. The office sector shows signs of stability, attributable to continued demand for existing office space and further delays in the delivery of mega-projects King Abdullah Financial District (KAFD) and the IT and Communications Complex (ITCC).
“Demand remains strong within the residential sector, particularly as high end residential properties and community developments, such as the Rafal and Damac projects, continue to be active and on track for scheduled completion in 2016 and 2017.”
Commenting on the Jeddah market, Ghaznawi added: “The real estate market in Jeddah shows continued growth momentum. The residential sector saw an increase in both apartment and villa rentals, as buying property remains a difficult option for middle income households.
“The Ministry of Housing, however, has plans to combat this shortage with the construction of around 15,000 additional units of affordable housing by 2017.
The office market continues to perform well, as multiple office buildings entered the market during the past quarter. With a steady supply of office space entering the market during the last quarter of 2015 and early 2016, we expect vacancy rates to remain stable and lease rates to increase moderately.”
Source: Arabian Business