Saudi Residential Market Experiences Modest Slowdown

Saudi Arabia’s economy maintained its upward trajectory in the first half of 2025, with real GDP growing by 3.6%, driven by non-oil activities, which expanded by 4.8% compared to H1 of 2024, and reflecting these conditions, the International Monetary Fund (IMF) slightly revised its forecasts, projecting GDP growth of 3.6% in 2025 and 3.9% in 2026.

The real estate sector, however, experienced a modest slowdown in transactional activity compared to H2 of 2024, Cavendish Maxwell, the largest firm of independent property consultants in the Middle East, said on Monday.

In its market report entitled “Saudi Arabia Residential Market Performance H1 2025 – Riyadh and Jeddah Spotlight Edition,” the firm said that despite this, both sales volumes and values increased in Riyadh City and Jeddah relative to the same period last year, suggesting that while seasonal fluctuations and rising prices have slightly tempered activity, the overall market remains robust, supported by ongoing population growth and strong economic momentum.

In Riyadh City, both sales and rental prices continued to rise, with apartment prices up 10.5% and villa prices up 12.4% over the past 12 months. Rental rates also increased, with apartment rents rising 10.3% and villa rents 14.4%. By contrast, Jeddah saw more moderate growth: apartment sales prices rose 1.8% and villa prices 2.5%, while villa rental rates declined by 2.7% over the same period.

On the supply side, Riyadh City delivered approximately 6,000 residential units in H1 of 2025, with around 18,000 additional units expected for the remainder of the year. Jeddah added 2,100 units in H1 of 2025, with approximately 12,700 more anticipated by year-end.

“Overall, the real estate market remains resilient in both Riyadh City and Jeddah, supported by strong demographic trends, continued economic growth, and supportive policy measures,” the report said.

Resilient Economy

The report further said that Saudi Arabia’s economy has demonstrated notable resilience and stability in recent years. Interest rates are on a gradual downward path, expected to fall below 5% by the end of this year and ease further to 4.35% by 2026, while inflation remains firmly under control at 2.3% in 2025 and a projected 2.2% in 2026.

At the same time, real GDP grew by 3.6% in the first half of 2025, driven by non-oil activities that expanded by 4.8% compared to H1’2024.

Reflecting these conditions, the IMF has slightly revised its forecasts, projecting GDP growth of 3.6% in 2025 and 3.9% in 2026. With employment at record highs, the Government has begun to gradually rein in public spending, supported by elevated hydrocarbon revenues that continue to provide ample fiscal space.

Together, these indicators highlight the robust health of the economy and reinforce the strategic importance of continued investments in transformative giga-projects.

Sales in Riyadh

In the first half of 2025, Riyadh City recorded approximately 35,600 residential sales transactions. When compared to the same period last year, transactional volumes rose by 10.1%. However, relative to the previous half-year, volumes declined, likely due to rising property prices which temporarily tempered demand in H1’2025, as buyers faced higher down payment requirements and monthly instalments, increasing the overall cost of homeownership.

Despite this short-term moderation, overall demand is expected to remain strong, supported by ongoing population growth and economic activity.

Sales Transactions by Value

Riyadh City recorded approximately $17.52 billion in residential sales transactions in the first six months of this year, with $8 billion recorded through the Ministry of Justice and $9.52 billion through the Real Estate Registry. While both transaction values and volumes declined compared to H2 of 2024, there was a notable y-o-y increase.

Transaction values surged by 62.6% compared with H1 of 2024, while volumes rose by only 10.1%. The divergence between value and volume growth indicated that higher-priced transactions occurred in H1 of 2025, highlighting the effect of rising property prices, the report said.