Riyadh Leads Decline with 4.4% Drop in First Quarter

Land and Rental Prices Fall in Riyadh Driven by Increased Supply and Enhanced Oversight and Regulation

Residential property prices in Saudi Arabia fell by 3.6% in the first quarter of 2026 compared to the same period last year, according to data from the General Authority for Statistics. The data showed that this decline extends a previous drop of 2.2% in the last quarter of 2025, amid a decrease in the residential component which represents the largest part of the real estate index. Villa prices recorded the largest decline among residential sector components at 6.1%, the sharpest drop since the first quarter of 2022, coinciding with the adoption of the updated methodology for the index. Geographically, Riyadh saw an acceleration in the decline, with prices falling 4.4% in the first quarter, compared to 3% in the previous quarter, marking the largest drop since the first quarter of 2022. In Mecca, prices fell by 0.7%, the first decline recorded in the region in recent times, while the Eastern Province saw an increase of 6.9%, the highest growth rate since the second quarter of 2022. These indicators reflect a divergence in real estate market performance across the Kingdom's regions, amid economic and market transformations affecting supply and demand levels.

Moreover, amid the transformations in the real estate sector in Riyadh, signs of balance are gradually emerging following a recent package of measures launched to address high prices. These measures have helped cool the market, with a tangible effect seen in a relative decline in land and rental prices, driven by increased supply and enhanced oversight and regulation. This approach reflects the leadership's commitment to recalibrating the real estate market to ensure fairness among all parties and enhance homeownership and residential stability. Based on studies conducted by the Royal Commission for Riyadh City and the Council of Economic and Development Affairs, and as a result of the increases the capital has witnessed in recent years, approval was given to adopt a number of regulatory measures directed by Crown Prince Mohammed bin Salman. These measures include lifting the suspension on large areas in Riyadh, allowing the resumption of sales, purchases, development, and issuance of building permits, which will inject new land into the market and increase real estate supply. They also include directing the Royal Commission for Riyadh City to provide planned and developed residential land for citizens at an annual rate of tens of thousands of plots, at set prices aimed at facilitating ownership, with controls to ensure they are used for actual housing. In the same context, the decisions include accelerating the amendment of the White Land Fee system to enhance land use efficiency, with amendments raising the maximum annual fee rate to no more than 10% of the property value, and reviewing the areas subject to the fee on white land, with the minimum land area or total land within the application scope not less than 5,000 square meters as determined by regulations.

In addition, efforts are underway to regulate the relationship between landlords and tenants to achieve balance and preserve rights. These include halting annual rent increases for residential and commercial properties in Riyadh for five years. Competent authorities have also been tasked with continuously monitoring the real estate market and submitting periodic reports to ensure sustained stability and curb price fluctuations. This package of measures reflects a strategic direction toward building a more mature and transparent real estate market that supports urban growth and aligns with the Kingdom's development goals.

On another front, the 'Real Estate Balance Platform' represents a qualitative leap in the urban development strategy led by the Royal Commission for Riyadh City, serving as a pivotal tool to regulate the residential market rhythm and bridge the gap between supply and demand. This initiative comes in implementation of the vision and directives of Crown Prince Mohammed bin Salman, aimed at enabling citizens to access advanced housing options befitting the capital's status.

The initiative's key pillars and objectives include urban development by focusing on addressing the shortage of residential land within the city limits through providing developed and ready-to-build plans. Market stability: contributing to creating price balance and abundance of supply, thereby reducing traditional real estate challenges. Improving quality of life: raising planning standards for new residential areas in line with Saudi Vision 2030 goals. And strategic support: enhancing the sustainability of population growth in Riyadh through innovative institutional solutions that ensure long-term stability of the real estate sector.