The volume of consumer loans allocated for home renovation and improvement during 2015 and 2016 approximately 123 billion riyals and 129 billion riyals, respectively, before beginning to decline at the end of the fourth quarter of 2016 to 29 billion riyals, according to data from the Saudi Arabian Monetary Authority, and this was accompanied by a decline in maintenance costs and rents in the residential sector.
Multiple loans
According to data from the Saudi Arabian Monetary Authority, loans for the renovation and improvement of residential properties accounted for 7 percent of total consumer loans obtained by individuals, and include, in addition to home renovation and improvement loans, loans for car purchases, healthcare, travel, education, and the purchase of furniture and durable goods.
342 billion riyals
The Saudi Arabian Monetary Authority (SAMA) stated that the volume of consumer loans extended to individuals by the banking sector reached 342 billion riyals between 2010 and 2016, According to the data, this range of loans grew at a quarterly rate of approximately 3.2 percent over the 28 quarters spanning from the beginning of 2010 to the end of 2016.
The data revealed that the volume of these loans more than tripled over six years, rising from 12 billion riyals at the beginning of 2010 to 37 billion riyals by the end of 2015, This growth, particularly in the last two years, is attributed to lower prices for building materials and reduced costs for maintenance and installation work related to the construction sector.
Decline in Housing Rent and Maintenance
On another note, reports from the General Authority for Statistics indicated a 0.7 percent decline in the index for housing-related expenses—including rent, maintenance, and services—in the first quarter of 2017, compared to the fourth quarter of 2016, This decline encompassed most figures related to the housing sector, such as housing maintenance, water, and other housing-related services like sanitation and cleaning, among others.
The latest release of this index showed that the price index for all types of real estate fell by 2.3 percent between the first quarter of 2017 and the fourth quarter of 2016, This decline began in 2014 and reached 9.9 percent over the past year (first quarter of 2017 compared to the first quarter of 2016), This decline in the overall real estate price index for the first quarter of 2017 compared to the fourth quarter of 2016 is attributed to falling real estate prices in the commercial sector (1.8 percent), in the residential sector (2.6 percent), and in the agricultural sector (0.3 percent).
Decline in residential real estate prices
In the residential sector, the composite residential real estate price index recorded a 9.5 percent decline over the past year, and 2.6 percent during the first three months of this year (2017). This decline encompassed all types of residential real estate, including land, apartment buildings, villas, apartments, and low-income housing, However, the most significant decline during the first quarter of 2017 compared to the fourth quarter of 2016 was recorded in apartment prices, at 3 percent, followed by residential land at 2.4 percent, while the decline in prices for apartment buildings, villas, and low-income housing did not exceed 1 percent.
Statistics on real estate transactions registered with the Ministry of Justice showed that the average price per square meter of residential land sold in the first quarter of 2017 was 376 riyals, while the price per square meter for residential apartments was 2,328 riyals. Villa prices saw a significant decline in the first quarter of 2017 compared to their prices in the fourth quarter of 2016, with the average price per square meter falling from 1,824 riyals to 1,560 riyals, representing a decline of approximately 15.5 percent. These declines are the result of several regulatory measures issued by the government, aimed at strengthening the country’s fiscal balance, controlling government spending, and developing non-oil resources, in line with the objectives of Saudi Arabia’s Vision 2030.
