Dubai: Demand for home purchases among Saudis has dropped significantly after property values recorded up to 45 per cent increases in high-demand locations.

Potential buyers are finding that these increases are pushing them out of the affordability range. “With villas in Riyadh and Jeddah standing at 13.3 and 15.1 times annual incomes, affordability thresholds have been exceeded,” said Faisal Durrani, Partner – Head of Middle East Research at Knight Frank.

Typically, six-times annual incomes is deemed as favourable to get more people thinking of buying homes. But the ‘last time affordability ratios in Saudi stood at these levels was in 2016, which also coincides with the last market peak’, said Durran.

In its survey of 1,014 Saudi households, carried out with YouGov, Knight Frank has found that Saudi households’ appetite to purchase a home - either as first-time buyers or as second homeowners - slowed over the last 12 months. Demand to buy a home in 2023 has slipped to 40 per cent, compared to 84 per cent last year.

More to follow...