A recent economic report issued by Jadwa Investment that housing costs in Saudi Arabia continue to rise significantly this year, exacerbating inflationary pressures on households.
The report indicated that rents for residential apartments rose by an average of 11.21% from the beginning of 2025 through the end of July, while villa rents recorded an increase of 6.81% during the same period. This is attributed to growing demand for residential units in major cities, driven by urban expansion, rising population numbers, and shifts in lifestyles.
The report confirmed that the housing and utilities sector remains the biggest driver of overall inflation, although the rate of increase has slowed to 5.6% compared to previous periods, which is due to the decline in the inflation rate in rents as the base year effect kicked in. Headline consumer price inflation in July stood at 2.11% year-on-year, while it remained stable on a month-on-month basis. Food and beverage prices also rose by 1.6%, driven by higher prices for fruits and nuts.
Meanwhile, the report noted that the non-oil Purchasing Managers’ Index rose to 56.4 points in August, supported by production growth and increased export orders, reflecting the continued expansion of private sector activities, despite a slower pace compared to the first quarter of the year.
On the consumer spending front, data showed total consumer spending in July rose by 15.41% year-on-year and 9.71% month-on-month, driven by a notable increase in e-commerce transactions (+79.51% YoY) alongside growth in point-of-sale transactions (+8.81% YoY).
The money supply (M3) grew by 8.41% year-on-year in July, while credit growth slowed to 15.21%. New mortgage loans also rose compared to June, but remained 9% lower than a year ago. Conversely, the central bank’s foreign exchange reserves fell by $13.6 billion to settle at $444 billion, a level that remains higher than it was at the end of 2024.
As for the financial markets, the Saudi Stock Exchange (TASI) index closed August trading at 10,700 points, down 21% from July and by about 11% since the start of the year. Average daily trading volume also hit its lowest level in 2025 at 4.3 billion riyals. The report confirmed that the decline in oil prices in August was one of the main factors weighing on economic performance, which increased investors’ caution regarding future expectations for activity and profits.
