Saudi housing sector cools as buyers wait for better times

• Total value of Q1 sales drops 57%
• Mortgage issuances down by a third
• Riyadh apartment prices still rising

Saudi Arabia’s residential housing market cooled in the first half of this year due to the economic fallout from the Iran war, affordability pressures and a drop in mortgage issuances, new data shows.

Residential transaction volumes fell by half in the first quarter compared to the same period last year, according to a survey conducted by real estate consultancy Knight Frank Mena. The total value of sales fell further by 57 percent to just SAR22 billion ($5.9 billion).

The slowdown was even more pronounced in Riyadh where transaction volumes and sale prices fell by 82 percent.

The decline continues a fall in house prices and sales in the capital that began before the war, owing largely to government initiatives aimed at bringing down housing costs. They included a rent freeze and a tax increase on unused or undeveloped land.

In the last quarter of 2025 Saudi house prices fell on average for the first time in five years.

“Predictably, the regional conflict has added to the weight of factors contributing to the slowing in residential sales activity that was evident well before the regional conflict began,” said Faisal Durrani, head of research at Knight Frank Mena in a note accompanying the report.

The real estate consultancy said there is “heightened nervousness amongst prospective buyers who are unwilling to make what is likely to be their largest financial commitment during a time of elevated regional geopolitical uncertainty”.

“For some households, the prospect of getting a ‘better deal’ should prices retreat as a result of the conflict is also another important consideration.”

The consultancy also reported an increase in “affordability pressures” for would-be home owners. Property prices grew steeply between 2019 and 2025, doubling in some parts of the country, according to Knight Frank.

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Despite a fall in transactions, housing prices in the capital continued to grow in the first quarter compared with the same period in the previous year, the report said. Apartment values in Riyadh increased by 6.3 percent year on year during the first quarter of 2026, while villa values rose by 4.9 percent.

At the same time, the total value of mortgage issuances has fallen dramatically, according to monthly data released by the Saudi Central Bank.

In the first quarter of the year banks signed SAR2.4 billion of new mortgage contracts, a third less than the previous year and the lowest amount of any first annual quarter since 2018.

As part of Vision 2030, Saudi Arabia said it intends for 70 percent of its citizens to be homeowners by the end of the decade. It is currently at 66 percent, up from 47 percent in 2016.