The fundamentals underpinning Saudi Arabia’s housing market “transcend” the impact of the Iran war, a property expert has said after residential transaction volumes fell 50 per cent year on year in the first quarter of 2026.
Uncertainty caused by the conflict, which began on February 28, was cited as one of the factors behind the decline, along with affordability pressures and weaker mortgage activity.
Despite the softer market activity, Knight Frank said underlying housing demand remains robust, supported by population growth, rising homeownership rates and ongoing government housing initiatives.
Saudi Arabia’s property sector remains a central pillar of Vision 2030 as the kingdom works to diversify its economy and position itself as a global tourism, investment and business hub.
“The long-term demand fundamentals underpinning the kingdom’s housing market transcend the ongoing regional conflict,” Faisal Durrani, partner and head of research for the Middle East and North Africa at Knight Frank, told Arab News.
The Real Estate General Authority expects the kingdom’s property market to reach $101.62 billion by 2029, with a compound annual growth rate of 8 percent from 2024.
Earlier this year, Saudi Arabia introduced a new framework allowing non-resident foreign ownership of real estate, one of the most significant liberalizations of the market to date.
Knight Frank said the reforms are expected to strengthen investor confidence, improve transparency and support long-term demand across both residential and commercial real estate.
Durrani said addressing affordability challenges will be key to unlocking demand from both domestic and international buyers.
Knight Frank’s analysis found that residential transaction volumes fell to 29,493 deals during the first three months of the year, while transaction values declined 57pc year on year to SR22bn ($5.86bn).
Saudi Arabia’s housing supply is also set to expand significantly. Riyadh’s residential stock is forecast to grow from about 2.7 million units in 2025 to more than 3.3m units by 2030.
The slowdown was most pronounced in Riyadh, where transaction volumes and values dropped 82pc compared with the same period last year.
Despite weaker sales activity, residential prices continued to rise across most major markets.
Apartment values in Riyadh increased 6.3pc year on year during the first quarter, while villa prices rose 4.9pc.
Apartment values in Jeddah and the Dammam Metropolitan Area climbed 2 pc and 2.3pc, respectively.
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