Real estate experts predicted that the Ministry of Housing’s 2017 and 2018 initiatives—comprising 580,000 housing units and financing packages—would help reset real estate prices and stabilize the sector by providing affordable options for buyers, helped lower prices, and restored the balance between supply and demand in the market. Some analysts went further, predicting that real estate prices will continue to decline this year now that the Ministry of Housing’s projects have become a reality on the ground, leading to an increase in supply and a decrease in demand.
Housing Products and Market Balance
On the same topic, Saif Al-Suwailem, spokesperson for the Ministry of Housing, explained that the agreements the Ministry signed with developers and financing companies to accelerate the construction of housing units have brought about a qualitative shift that addresses citizens’ needs, Through the Ministry’s previous achievements—most notably the Sakani Program— we expect to see further steps taken this year as part of our efforts to achieve market balance and enable citizens to obtain suitable housing with diverse options, high quality, reasonable prices, attractive designs, integrated infrastructure within projects, and access to service facilities.
Al-Suwailem added that the housing units—which include villas, apartments, and townhouses—take into account the varying financial capacities of beneficiaries, as well as their diverse preferences, and provide them with all the necessary facilities to enable them to own their first home. In return, agreements will be introduced in 2018 targeting low-income groups and those receiving social security benefits, as part of the Ministry’s efforts to provide housing for all segments of society.
Investors Must Adhere to Fair Prices
Riyad Al-Thaqafi, a former member of the Housing Committee at the Jeddah Chamber of Commerce, predicted an increase in the number of citizens owning residential units and their transition from the rental market to homeownership; which will force investors to adapt to market fluctuations and align with the fair prices that the Ministry of Housing seeks to achieve as part of its objectives, in parallel with its diverse range of products, which serve as an indicator for prices across the entire sector by setting the prices granted to beneficiaries and homebuyers, all of which compels investors to align with the fair prices set by the Ministry of Housing.
Al-Thaqafi explained that the partnership with developers who have experience in the construction market has led to a surge in housing numbers, as opposed to having companies and banks that finance the customer under one roof, as has been the case in more than one of the Ministry’s projects, which has fostered tangible optimism within the Kingdom’s real estate sector.
Optimism Regarding Real Estate Market Stability
For his part, real estate investor Thamer Al-Qurashi offered a useful perspective, noting that the market at this stage is no longer governed by its investors, as there are multiple factors putting downward pressure on prices, such as the Ministry of Housing’s projects, which have been announced in several provinces, and as of early 2018, many beneficiaries have signed their contracts in partnership with financing institutions, with prices ranging from 250,000 to 700,000, which has caused some investment units to fall below one million.
Despite these early signs of price volatility, market observers expect 2018 to mark the beginning of stability in the real estate sector—not only in terms of purchases but also in the rental market—as a result of rising homeownership rates, whether through off-plan sales in a number of areas or through projects completed by developers and handed over to beneficiaries. This means that the government, through the Ministry of Housing, has managed to curb the sharp rise in real estate prices—which had previously tripled in some areas.
