revealed a decrease in the value of real estate transactions and the total areas implemented and an increase in their number compared to the previous month, December 2016, as well as compared to the same period last year, January 2016.

Gradual decline

These results come in line with most expectations of a gradual decline in transactions in all regions of the Kingdom, and from a neutral point of view, this decline is natural given the calm that has prevailed in the real estate market for some time as a result of many factors, including prices exceeding the purchasing power of the end consumer and the lack of supply of new housing units that meet the needs of middle and low-income segments.

These results are in line with most expectations of a gradual decline in deals in various regions of the Kingdom.

Real estate financing was previously a major reason for a small segment of citizens wishing to own property and contributed to the low trading volume during the past years. In addition to waiting for the results of the decision to impose fees on white lands within the urban area and the extent of its contribution to pushing landowners to develop them or sell them to other developers to contribute to increasing the supply of land ready for construction and development, which is natural and as a correction to the wave of astronomical rises in land prices and residential real estate, as well as its reflection on high rental prices, specifically and rapidly between 2007 and 2012.

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Real estate market stagnation

The impact of the recession on the real estate market in the past on the residential sector more, whether land or ready-made housing units, and the reason for this, according to the reactions and opinions of some citizens directly or in the media and social media, is the desire for lower prices to match their purchasing power, as well as waiting for the housing projects implemented by the Ministry of Housing, developed lands and loans implemented this year as we mentioned at the beginning of the report, and also the desire of various other segments to obtain housing products and lands through private sector projects, especially since there is a large segment that will not benefit from housing projects directly but will rely on the private sector.

Low trading ratio

Returning to the numbers, we note that trading in January 2017 reached 18.9 billion riyals, down 11% from December 2016, which achieved 21.2 billion riyals, and down 45% from the same period last year, which achieved 35 billion riyals. Most of the trading during last month was on land plots, which accounted for about 88% of the total value of transactions amounting to 16.7 billion riyals, of which 10.7 billion for residential land and 6 billion riyals for commercial land.

Trading on residential villas and apartments remained at lower rates than expected compared to the volume of demand, as the sales of apartments achieved 824 million riyals, while the sales of villas reached 82 million riyals for all regions of the Kingdom, and these rates are few and at their minimum limits in view of the large demand for ready-made housing units, and the reasons as mentioned are high prices and the small supply of units compared to the volume of demand, limited financing and waiting for the projects and products announced by the Ministry of Housing.

Different indicators

The figures came low in some indicators and high in others compared to the previous month, December 2016, and low in all of them compared to January of last year in terms of the value of transactions, number of properties and areas executed. As for the number of properties sold in January, it amounted to 22,281 properties in various regions of the Kingdom, and January came better than the previous month, December 2016, which achieved 18,846 properties between residential and commercial, with an increase of 18%, which confirms the increased demand for real estate trading compared to the previous month. Compared to the same period last year, the number of properties sold decreased by 2% to 22,756 properties.

Residential takeover

The residential sector (according to the Riyadh newspaper report) in January acquired the largest share in terms of the number of properties sold, which amounted to 19,002 residential properties, and commercial achieved 3,279 properties. As for the total areas implemented for January 2017, it reached 555 million square meters in all regions of the Kingdom, including 410 million square meters of residential areas, and the rest commercial areas amounted to 145 million square meters. It surpassed last December with an increase of 55%, which achieved deals with an area of 359 million square meters. And down by 99% from the same period in January last year. One of the news that is expected to contribute to increasing the movement of the real estate market in the coming months is the announcement by the Ministry of Housing last month of its intention this year to launch more than 280,000 housing products ranging from ready-made housing units, villas, apartments, developed residential lands and mortgage loans for loan recipients in the Real Estate Fund.

The SAMA decision to increase the value of financing for home loans from 70 to 85% will contribute to increasing demand and there are real estate finance companies and banks that have started to intensify their moves to attract more customers.