Residential transactions slow in KSA due to affordability issues

19 February 2024 2 min. read

The total number of real estate transactions in Saudi Arabia slumped with double digits last year, driven by a similar in size drop in real estate deals.

The total number of deals in the real estate sector slipped by -17% in 2023 to just over 177,000, while the total value of all deals declined by -9% to SAR 197.7 billion over the same period, according to a report from global property consultancy Knight Frank.

Residential transactions, which account for nearly 60% of the total number of transactions in Saudi’s real estate sector, registered a -16% fall in the number of deals to just under 150,000 transactions.

Residential transactions slow in KSA due to affordability issues

Commenting on the development, Faisal Durrani, partner at Knight Frank, said: “The figures certainly reflect what we have been expecting for some time.”

“The residential market has experienced phenomenal price growth over the last two to three years, with prices in Riyadh, for instance, continuing to climb into record high territory. Unsurprisingly, the high home values have contributed to growing affordability issues, which have been further exacerbated by the rising cost of borrowing.”

Higher interest rates have seen the total number of mortgages issued in 2023 drop by 35%, compared to a decline of 22% over the same period last year.

“A further complication in the housing market is the structural shift in demand. Younger Saudi’s are delaying home ownership not only due to affordability considerations, but intra-Saudi migrants are preferentially seeking to rent, rather than own.”

Residential transactions slow in KSA due to affordability issues

The downwards pressure on housing purchases has triggered a price correction nationwide. According to Knight Frank, the average price of residential property sales dropped 16% during 2023. Riyadh was a notable exception however, the country’s capital city saw home prices rise, with apartment prices up 4.5% compared to the year previous, and villa prices up 0.5%.


Mortgage affordability is becoming a critical issue in the Kingdom’s real estate market. The Saudi Ministry of Housing has been actively working to address the demand for more affordable homes as it works towards its 70% homeownership target by 2030.

To bolster homeownership among nationals, a new mortgage guarantee services firm called ‘Dhamanat’ was launched in July 2023. Dhamanat’s role is to provide financing guarantees in conjunction with mortgages, thereby facilitating easier access to home financing.