Home ownership may be increasingly out of reach for Saudi nationals and expats, as high real estate prices and interest rates are seen as significant hurdles, according to a report (pdf) from real estate consultancy Knight Frank. The report’s findings are based on a survey of c.1k respondents, over 80.5% of which are Saudi nationals earning between SAR 10k-50k. Around 10% of the respondents are Saudi nationals with monthly incomes exceeding SAR 50k, and the remainder are expatriates earning SAR 30k or more per month.

REMEMBER- The government is rolling out policies — including buyer-friendly mortgages — as it looks to achieve a 70% home ownership target by 2030, but the Kingdom also needs to build out an additional 1.2 mn housing units by 2030 in order to meet that goal. The state-run National Housing Company has been tasked with building affordable housing options, with 200k homes in the pipeline and potential for that figure to reach 300k by the end of 2025, Knight Frank’s Chief Economist for MENA Christopher Payne estimates.

Appetite for home ownership in Saudi Arabia among nationals fell 11 percentage points to 29% this year compared to 2023, the report shows, with the highest-earning segment showing the strongest appetite for buying a home this year. Across nationals and Saudi-based expats, that number is slightly higher at 33%. Around 31% of all respondents said they have no interest in transacting on a home in 2025 because they already own a property, while 13% cited high real estate prices as their main reason. Meanwhile, some 67% of the highest-earning bracket of nationals cited high interest rates as a “major hurdle” to their home ownership plans.

STATS BY GEOGRAPHY-

Apartment prices in Riyadh rose 10.6% y-o-y in 2024, while villa prices increased 6.3%. Home sales grew 44.2% y-o-y to 63k transactions, with the total value rising over 30% to SAR 75.7 bn. Despite this growth, Knight Frank noted that many mid-market buyers are struggling to afford homes due to the rapid price increases seen in recent years.

Jeddah recorded the highest transaction growth, with residential sales up 53% y-o-y in 2024 to 28.1k, driven by the Saudi Central Bank lowering the minimum down payment for property purchases to 5%. However, rising apartment prices (+3.1% y-o-y), alongside declining villa prices (-1.7% y-o-y) indicate affordability challenges, according to the report. Demand is also increasing as citizens reinvest government compensation into real estate.

The Holy Cities: In Makkah and Madinah, high-net-worth international Muslim buyers are eyeing the market heavily and are anticipating regulatory changes allowing market entry. Knight Frank reports that 82% of Saudi non-residents plan to invest around USD 2 bn in real estate once permitted.

Saudi Arabia also faces a potential oversupply of luxury housing within the next five years unless foreign ownership laws are reformed to attract new sources of demand, head of Middle East research at Knight Frank Faisal Duranni tells Bloomberg. This potential oversupply comes as domestic demand remains constrained since only a small segment of the Saudi population may be able to afford new housing.

The solution? More affordable housing and better access to developer-linked financing are needed — especially for expatriates — amid high interest rates, according to Knight Frank. “An important aspect of home financing … is the ability of expats, and indeed international buyers, to access local financing options,” the report said. Knight Frank suggests that building smaller rental homes and introducing “rent-to-own” schemes could provide developers with a strategic exit plan, offering flexibility to buyers. Additionally, it suggests introducing more branded residential developments in the Kingdom.

Looking ahead: “What we are experiencing now is an organic slowing in demand as the 70% home ownership target approaches and as residential values start to peak in the current cycle. The rampant house price growth across the country, too, is curbing the appetite to purchase,” said Knight Frank’s Regional Partner for Strategy and Consulting Harmen de Jong. The consultancy estimates that 115k homes must be built annually for the next six years to meet demand but warns that supply may not meet expectations.

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