House prices in Jeddah rose during the quarter ended September as consumers took advantage of newly available mortgages to buy homes and move out of rented accommodation.
“Demand has shifted more towards purchase rather than rental, partly because of the increased availability of mortgages to purchase residential property,” said Jamil Ghaznawi, the national director and country head of the property consultancy JLL’s Saudi office.
Average apartment prices in Saudi Arabia’s second-largest city rose 13 per cent compared with the previous quarter to 4,419 Saudi riyals (Dh4,326) per square metre, according to figures published on Sunday by JLL.
Villa prices increased 10 per cent during the quarter to 6,669 riyals per sq metre in the western part of the city and were up 3 per cent to 4,428 riyals per sq metre in the city’s northern areas.
At the same time, apartment rents fell by an average of 4 per cent between July and September, with annual rent for a three-bedroom apartment standing at 37,133 riyals. All areas apart from the well-heeled west of the city were hit by the slump.
Villa rents also declined by an average of 3 per cent across the city, standing at an average of 121,000 riyals per year for a four-bedroom property – although rents for villas in the west of the city continued to rise.
Demand for mortgages in Saudi Arabia has increased rapidly since the kingdom finally approved its controversial first mortgage law in 2012.
Saudi authorities had discussed introducing a mortgage law for the past 30 years but previously plans were not granted approval because of resistance from religious scholars concerned about whether mortgages were compliant with Sharia law.
Saudi banks increased their lending to real estate end users by 25.6 per cent during the final quarter of last year, mostly as a result of new mortgage lending, JLL said
In the kingdom’s largest city, Riyadh, house prices and rents also rose steadily across all areas – something JLL put down to a lack of housing stock.
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