Saudi banks granted SR7.07 billion ($1.9 billion) in new residential mortgage loans in July, reflecting a 33% increase from June, according to data from the Saudi Central Bank (SAMA). The number of loan contracts also rose, reaching 9,605, up from 7,274 in the previous month.
The residential loans are primarily used for purchasing houses, apartments, and land. Of these, SR4.38 billion, or 62%, was allocated for house purchases, despite loans for houses rising by only 28% month-on-month. This marks a shift from a year ago when house loans accounted for 72% of the market.
Notably, loans for apartments surged by 40% in July, reaching SR2.26 billion, increasing their share of the mortgage market from 23% to 32% over the past year. Loans for land purchases, though representing just 6% of the market, saw the highest growth, rising 63% to SR429 million.
This shift toward apartment lending reflects changing economic and demographic trends in Saudi Arabia. As property prices rise, particularly in cities like Riyadh, affordability is driving more buyers toward apartments. The capital’s projected population growth, expected to reach between 15 million and 20 million by 2030, further fuels demand for smaller, more affordable homes and rental units.
Riyadh’s booming population and rising real estate prices are transforming the housing market. According to Knight Frank, apartment prices in Riyadh have risen 26% since 2016, while villa prices increased by 21%. The government’s Vision 2030 initiative, which aims to increase homeownership to 70%, has contributed significantly to this growth, supported by various mortgage programs.
Additionally, real estate transactions in Saudi Arabia saw a 38% increase in the first half of 2024, driven by government initiatives and the influx of businesses relocating to Riyadh under the regional headquarters program, which further boosts housing demand.
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