3 days ago
Saudi banks' new-home lending jumps 24% to $9bn despite higher rates
RIYADH: Saudi banks extended SR34.1 billion ($9.1 billion) worth of fresh residential mortgages to individuals in the first four months of 2025, up 24.14 percent from the same period last year.
Latest data from the Saudi Central Bank, also known as SAMA, shows that January led the surge with SR10.5 billion in new loans, followed by February at SR8.9 billion, March at SR8.4 billion and April at SR6.3 billion.
The brisk start to the year pushed total outstanding retail real-estate lending to a record SR698.8 billion at the end of the first quarter, surpassing the SR223.4 billion on corporate property books and underscoring the dominance of households in the market.
The momentum is tied to a range of Vision 2030 housing initiatives aimed at lifting Saudi home ownership to 70 percent by the end of the decade.
Flagship programs such as Sakani, low-cost mortgage guarantees and the Saudi Real Estate Refinance Co.'s liquidity windows continue to funnel buyers into the market.
Digital procurement partnerships are also speeding up delivery times. In February, Riyadh-based Penny Software teamed up with the National Housing Co. to automate sourcing for thousands of new units, a move expected to shave costs across the supply chain.
The platform will function as a centralized procurement hub, directly connecting NHC contractors with vetted suppliers to streamline purchasing and enhance supply-chain oversight, tackling the bottlenecks that traditional procurement creates in housing projects.
The acceleration has come in the face of the highest interest rate environment in nearly two decades.
Knight Frank's February household survey showed demand is cooling. Only 29 percent of Saudi tenants now plan to buy a home in 2025, down from 40 percent a year earlier, with 'house prices being too high' ranking among the top three deterrents after already owning a property and having no reason to move.
The consultancy pins the softer appetite on 'a high-interest-rate environment and rampant price growth, particularly in Riyadh,' which is nudging younger Saudis toward renting instead of owning.
Official figures confirm that tight supply is still feeding through to valuations. The General Authority for Statistics said Saudi real estate prices rose 4.3 percent year on year in the first quarter, with residential values up 5.1 percent.
Villa prices jumped 10.3 percent nationwide, while residential land — which carries the heaviest weight in the index — gained 5.3 percent.
Knight Frank's survey also showed private buyers still eyeing flagship giga-projects such as NEOM and the Red Sea, although interest in the former has moderated as alternative master-planned communities come on stream.
With oil receipts fueling fiscal space, policymakers are expected to keep subsidising mortgages and unlocking land banks, even as central-bank rates remain high through mid-2025.
