Regulatory measures restore balance, real estate credit rises to 393 billion riyals

Residential sector leads decline.. Riyadh records price drop

General real estate price index in the Kingdom falls by 0.7%

Real estate prices in the Kingdom of Saudi Arabia recorded a year-on-year decline in the fourth quarter of 2025 for the first time in several years, driven by a drop in residential real estate prices and a slowdown in activity in several major regions, foremost among them the Riyadh region, coinciding with government measures aimed at boosting real estate supply and curbing the pace of price and rent increases.

According to the economic report for the fourth quarter of 2025, released by the Ministry of Economy and Planning, data showed that the general real estate price index in the Kingdom fell by 0.7% year-on-year to 103.5 points, affected by the decline in residential sector prices, while performance varied across the Kingdom's regions, with the Eastern Province and Makkah recording the highest growth rates, and Hail topping the list of regions with the largest declines.

Report details

By administrative division of regions, the Eastern Province recorded the highest annual growth rate in real estate prices during the fourth quarter of 2025 at 4.0%, followed by the Makkah region at 2.5%. Prices also rose in the Tabuk, Jazan, and Al-Jouf regions by 1.1%, 1.1%, and 0.49%, respectively.

In contrast, the Hail region topped the list of regions with the largest decline at 8.9% year-on-year, followed by the Northern Borders region at 6.8%, then Al-Madinah at 6.1%. The Al-Baha, Riyadh, and Al-Qassim regions recorded declines of 5.0%, 3.0%, and 2.7%, respectively.

The Riyadh region witnessed a notable slowdown in the last two quarters compared to previous periods when it led growth rates among the Kingdom's regions, before recording a decline in the fourth quarter of 2025. This follows high directives to take a number of regulatory and developmental measures aimed at increasing real estate supply, enhancing the balance between supply and demand, and contributing to curbing the rise in real estate prices and rents in the capital.

At the general index level, the real estate price index recorded 103.5 points during the fourth quarter of 2025, a year-on-year decline of 0.7% compared to the same period last year.

The residential sector was the main factor behind this decline, with its prices falling by 2.2% year-on-year, recording the second consecutive decline. This drop resulted from a 2.4% decrease in residential land prices, a 1.3% decline in villa prices, and a 2.5% drop in apartment prices.

In contrast, the commercial sector continued to record positive growth, with commercial land prices rising by 3.5% year-on-year, and commercial building prices increasing by 5.7% during the same period, supported by increased demand for commercial and investment spaces.

The agricultural sector also recorded an annual increase of 4.3%, driven by a rise in agricultural land prices in several regions.

Despite the growth in the commercial and agricultural sectors, the residential sector had the greatest impact due to its high relative weight in the general index, accounting for 72.7% of the total index weight, compared to 25.4% for the commercial sector and 1.9% for the agricultural sector. This relative weight helped limit the impact of the increases recorded in other sectors on the general real estate index.

As for real estate financing, bank credit granted to real estate activities recorded annual growth of 22.4% during the fourth quarter of 2025, and rose by 4.2% quarter-on-quarter to reach approximately 393 billion riyals.

In contrast, data for new residential financing for individuals showed a notable decline, with the value of financing provided by commercial banks and financing companies falling by 47.2% year-on-year to about 16 billion riyals during the fourth quarter of 2025.

Residential contracts concluded also declined by 42.3% compared to the same period last year, reaching a value of about 23 billion riyals, an indicator reflecting the slowdown in residential demand compared to the activity levels witnessed in the market in previous years.

On this, specialists say: 'The current indicators point to the real estate market entering a more balanced phase after years of rapid increases, especially in the residential sector. It appears that policies aimed at increasing supply and improving market efficiency are gradually bearing fruit. However, the sustainability of this trend will remain linked to the market's ability to achieve a lasting balance between supply and demand, and the continued growth of financing and real estate investment at a measured pace that supports price stability and expands ownership opportunities.'