The Real Estate Index showed the decline in real estate transactions after the implementation of the new mortgage regulation (16\/1\/1436 AH), which requires the payment of 30% as a down payment to obtain financing for the purchase of housing or land. Indicates a decline in sales during the fourth week of Muharram (Sunday, January 23, 1436 AH). Until its end, with total transactions amounting to more than 6 billion riyals in all cities of the Kingdom in the residential sector, including 1.7 billion riyals in Riyadh, and the total trades in the (last week) and after the implementation of the regulation amounted to 8.4 billion riyals, including 2.3 billion riyals in the commercial sector, in all regions of the Kingdom. <\/p>\n
Western region
\nThe real estate index concluded the month of Muharram with Riyadh topping the number and value of real estate transactions with 5.583 thousand transactions worth 12.7 billion riyals, distributed as follows: 4.978 thousand land deals, 257 apartments, 137 villas, and 1489 buildings.
\nIn the western region, the city of Jeddah came second in the value of real estate transactions with 3.099 thousand transactions worth 5.91 billion riyals, distributed as follows: 2.578 thousand land deals, 485 apartments, and 19 villas, thus Jeddah leads the number of apartment sales over all cities in the Kingdom.
\nIn all cities of the Kingdom, the number of transactions executed during the month of Muharram amounted to 28.690 thousand transactions, of which 84.6% for the residential sector with 24.283 thousand transactions, and 4.407 thousand transactions with 15.4% for the commercial sector. They were distributed as follows: 24.988 thousand deals for land, 1.678 apartments, 215 villas, and 156 buildings.
\nThe number of real estate transactions during the month of Muharram ended in the Kingdom's regions in order as follows: Riyadh region (30.5%) with 7.398 thousand transactions, Makkah region (18.6%) with 4.506 thousand transactions, Eastern region (16.1%) with 3.915 thousand transactions, Qassim region (9.3%) with 2.251K deals, Medina (7.9%) with 1.924K deals, Hail (4.2%) with 1.021K deals, and Asir (4.1%) with 995 deals. <\/p>\n
Decline in villa sales
\nOn the other hand, the Saudi real estate market ended its second week since the start of the full mandatory implementation of the financing regulations, and it may be too early to judge for sure whether it will be affected or not, and the degree of that impact, despite the stagnation that began before the implementation of the regulations at the beginning of this month.
\nIn the coming weeks or even two months, the degree of impact will be confirmed or not, a period that is burdened with many monitoring of various indicators and factors locally and externally, distributed between monitoring the impact of financing systems and regulations on the one hand, and on the other hand monitoring the fluctuations in the global oil price, because it has very important implications for the inflows to the economy, as these flows are the most important provider of government spending levels in the national economy, and the strength of their impact on the levels of local liquidity, in addition to the rest of the factors involved in the adoption of land fees within the urban area.
\n Real estate prices
\nIndicators of the real estate market since the beginning of this year have shown different trends, while sales in the residential sector in terms of agricultural lands, houses, apartments and plots of land increased for the period from the beginning of the year until the end of last week, compared to the same period last year, with growth rates of 11.8 percent, 72.8 percent, 19.0 percent, and 3.5 percent, respectively, were offset by a decline in the same period for both residential buildings and villas, amounting to 23.7 percent and 38.6 percent, and the result of all these discrepancies appeared in a slight growth in the number of residential properties sold during the period by about 3.7 percent.
\nHowever, looking at the developments in the last three months of the current year, and comparing them to the same period last year, the developments tilted in favor of the decline, with the decline rates for residential houses and villas rising to 37.1 percent and more than 43.6 percent, respectively, and growth for the rest of the other items tended to slow down at rates lower than those achieved during the longest period since the beginning of the year.
\nThis is due to the presence of new influences and factors on the market during the recent period, the most important of which were mentioned at the beginning of the report (internal and external factors), and the picture is expected to become clearer in the coming weeks, which may extend to January 2015 or the following two months at the latest, during which time there will be clarity on the decision to impose fees on land within the urban area, and the announcement of the general government budget for the next fiscal year.<\/p>\n
Decline in sales volumes
\nThe readings of the price indicators compared to the sales volume indicators also show that the higher the prices rise, the more the market witnesses a decline in sales volumes! Accordingly, the current and upcoming period will be viewed by focusing on these two indicators, as one of the signs of the bursting of the price bubble is that the quantities of sales and transactions begin to decline, as prices reach levels that exceed the purchasing power of individuals, although the period before its bursting did not see real indicators confirming this. However, this speculation began to decline during the last two months, as shown in the last graph, which was reflected in the average price per meter of land plots, which declined during the past eleven months, compared to the same period last year, by about 23.2 percent, to settle at 510 riyals per square meter, compared to 664 riyals per square meter last year.
\nSurplus housing units<\/p>\n
The data shows that the surplus supply of housing units increased by about 635,000 housing units, which is reflected on the ground by the crowding of advertisements and sale boards on the streets of cities and through the pages of commercial advertisements, in addition to other advertisements for the sale of plans and lands, which must be taken into account by individuals looking for housing for ownership, to correct the wrong idea about the lack of supply of housing units, which is a false idea promoted by real estate brokers to push prices up.
\nThe surplus supply of housing units is one of the most important indicators confirming the decline in purchasing throughout the previous period, meaning that the construction and reconstruction operations with the aim of selling did not coincide with buying at the same speed, as evidenced by the decline in the number of properties sold during the recent period, and the main reason behind the widening of this gap between the increase in supply and the decline in demand is focused on the rise in prices beyond the ability of individuals, and perhaps the bet of the parties (real estate developers) building these units on financing systems, collided with the strict conditions for granting the necessary financing, especially the requirement of the purchase deposit of 30 percent of the cost of the project. <\/p>","protected":false},"excerpt":{"rendered":"
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