As 2026 began, Saudi banks sent signals of recovery to the residential real estate market, after new financing for individuals recorded a notable increase on a month-over-month basis in January, even as annual figures continue to reflect significant pressure compared to last year’s levels.
According to the statistical bulletin issued by the Saudi Central Bank, the total new residential mortgage financing for individuals provided by banks reached approximately 6.189 billion riyals in January 2026, compared to 5.548 billion riyals in December 2025, marking a monthly growth rate of 11.5%.
Villas Account for the Largest Share
New financing was distributed across three main sectors: villas, apartments, and land, with villas continuing to account for the largest share of total financing.
Financing for villas reached 4.079 billion riyals in January 2026, compared to 3.774 billion riyals in December 2025, reflecting a notable increase in demand for this type of residential unit.
Financing for apartments also rose to 1.699 billion riyals in January, compared to 1.428 billion riyals in December, while land financing reached 411 million riyals, compared to 346 million riyals in the previous month, indicating a relative improvement across various sectors during the first month of the year.
Year-over-year decline exceeds 40%
Despite the monthly improvement, the data showed a sharp year-over-year decline, with total new residential mortgage financing for individuals falling by 40.8% compared to January 2025, which recorded 10.464 billion riyals.
A breakdown of the figures reveals that financing for villas fell from 6.638 billion riyals in January 2025 to 4.079 billion riyals in January 2026. Financing for apartments also fell from 3.351 billion riyals to 1.699 billion riyals during the same period, while financing for land decreased from 475 million riyals to 411 million riyals.
Growth in Loan Balances by the End of 2025
In a related development, the bulletin revealed an increase in the total mortgage loans held by commercial banks during the fourth quarter of 2025 by 1.4% compared to the third quarter of the same year.
Mortgage loans reached approximately 951.302 billion riyals in the fourth quarter of 2025, compared to 937.998 billion riyals in the third quarter, reflecting continued credit expansion, albeit at a moderate pace.
These indicators reveal a mixed picture of the residential real estate market in Saudi Arabia; a monthly recovery driven by increased demand at the start of the year, offset by a significant year-over-year decline compared to the peak in financing recorded in January of last year, making the performance of the coming months crucial in determining the market’s trajectory throughout 2026.
