New residential financing for individuals in Saudi Arabia saw a significant rise during the first eight months of 2024, reflecting growing demand for residential real estate and continued economic stimulus. According to data from Saudi Central Bank (SAMA), new residential financing reached SR55.76 billion, a growth of 2.7% compared to the same period last year. In this report, we review the most important developments and figures related to retail housing finance in the Kingdom, as well as analyze future trends and opportunities.
Housing finance rises in 8 months
Saudi Arabia recorded a rise in the volume of new residential financing for individuals by 2.7% year-on-year during the period from January to August 2024. Total financing provided by banks and finance companies amounted to SAR 55.76 billion, compared to SAR 54.2 billion in the same period in 2023. This growth reflects the increased demand for residential homes and the expansion of the real estate market in the Kingdom.
Increase in the number of funded contracts
On the other hand, the number of funded contracts in the real estate market increased by 7.3% during the first eight months of this year. 75.51 thousand financing contracts were signed compared to 70.38 thousand contracts in the similar period last year. This rise in the number of contracts reinforces the confidence of investors and buyers in the real estate sector in the Kingdom.
Housing finance from banks rose
Housing finance provided by banks in the Kingdom witnessed a remarkable growth of 23.3% during the period from January to August 2024, as the value of financing reached about 54.09 billion riyals, compared to 52.24 billion riyals in the same period of 2023. This rise reflects the financial strength of banks and their ability to meet the needs of individuals seeking housing finance.
<The number of contracts financed by banks increased by 9.09% to reach 73.52 thousand contracts, compared to 68.1 thousand financing contracts in the same period of 2023. This growth in the number of contracts reflects the expansion of the real estate market and the increased demand for housing finance from banks.
Housing finance declined in August
Despite the overall growth, August 2024 saw a slight decline in the volume of housing finance from banks by 7.56%, as the value of financing amounted to about 6.6 billion riyals compared to 7.14 billion riyals in the same month of 2023. Despite this decline, the month saw a slight increase in the number of funded contracts by 0.66%, with 9.11 thousand contracts funded compared to 9.05 thousand contracts in August 2023.
Decrease in funding from finance companies
At the level of financing companies, residential financing witnessed a decrease of 13.02% during the period from January to August 2024, as the value of financing provided by financing companies amounted to about 1.67 billion riyals compared to 1.92 billion riyals in the similar period last year. The number of contracts financed by finance companies decreased by 12.72% to 1.99 thousand contracts compared to 2.28 thousand contracts in the same period of 2023.
Apartments lead the financing volume
With regard to the types of properties financed, the value of financing provided for the purchase of villas amounted to about 722 million riyals until the end of August 2024. Financing worth SAR 765 million was provided for the purchase of apartments and SAR 189 million for the purchase of land during the same period. This diversity in financed properties reflects the growing demand for different types of housing in the Kingdom.
<In conclusion, the continued growth in new residential financing for individuals in Saudi Arabia through 2024 shows that the real estate sector remains attractive for investments, driven by economic reforms and growing demand for residential properties. Despite the challenges the market may face, such as the slight downturn in August, the overall trend points to continued growth and recovery in the sector. Housing finance is expected to continue to play a vital role in promoting real estate development and supporting the Saudi economy.
