Riyadh Residential Transaction Volumes — Sales Activity, Buyer Profiles, and Liquidity Analysis

Riyadh Residential Transaction Volumes — Activity, Liquidity, and Buyer Composition

Transaction volume data provides the most direct measure of market health and participant confidence in Riyadh’s residential real estate market. While prices tell you what buyers are willing to pay, transaction volumes tell you how many buyers are actually transacting — a distinction that becomes critical during market inflection points when prices may remain elevated even as activity contracts. Riyadh’s transaction volume trajectory through 2022-2026 reveals a market that has moved from frenetic activity to more selective, measured participation.

Historical Volume Context and the Mortgage Revolution

Riyadh’s residential transaction volumes must be understood in the context of the Kingdom’s broader real estate market transformation. Before the introduction of standardized mortgage finance in 2017-2018, Saudi Arabia’s residential market was predominantly a cash market. Transactions were concentrated among wealthy families, institutional investors, and the relatively small segment of the population that could accumulate sufficient savings for outright purchase. Transaction volumes were accordingly modest, and market liquidity was limited.

The mortgage revolution changed this dynamic fundamentally. Between 2017 and 2022, the introduction of Sakani subsidized financing, the reduction of minimum down payments from 30 percent to 10 percent and subsequently to 5 percent for first-time buyers, and the establishment of the Saudi Real Estate Refinance Company (SRC) to provide liquidity support to mortgage originators collectively transformed Saudi Arabia’s residential market from a cash-driven niche into a broad-based consumer market. Transaction volumes surged as millions of previously excluded households gained access to housing finance for the first time.

Riyadh, as the Kingdom’s largest and most economically dynamic city, captured a disproportionate share of this volume growth. The capital accounts for approximately 35 percent of all residential real estate transactions in Saudi Arabia and an even larger share of total transaction value, reflecting the higher average prices commanded by Riyadh properties relative to other Saudi cities. The capital’s 41.5 percent share of the national residential market by value underscores its dominance in the Saudi housing ecosystem.

The volume trajectory from 2018 through 2024 followed a clear upward arc. Each year brought more mortgage originations, more Sakani beneficiaries entering the purchase pipeline, and more developer launches catering to the expanding buyer base. Transaction volumes grew in tandem with the national homeownership rate, which climbed from 47 percent in 2016 to 60 percent by 2020 and 63.74 percent by 2023, tracking toward the Vision 2030 target of 70 percent.

The Volume Contraction of H1 2025 — A 31 Percent Decline

The most significant volume event in Riyadh’s recent market history was the 31 percent year-over-year decline in residential transaction volumes recorded during the first half of 2025. This contraction, measured against the elevated volumes of H1 2024, reflected a market adjustment that had been building for several quarters.

Multiple factors contributed to the volume decline. Interest rates, which had risen through SAMA’s tightening cycle (tracking the Federal Reserve’s rate hikes due to the riyal-dollar peg), increased the cost of mortgage finance and reduced the number of households that could qualify for loans at prevailing prices. A household that qualified for a SAR 1.5 million mortgage at 4 percent interest would qualify for only SAR 1.3 million at 5.5 percent — a difference that could push the target property beyond reach and eliminate the household from the buyer pool entirely.

Affordability constraints intensified as the cumulative effect of four years of price appreciation became apparent. Riyadh’s residential prices had roughly doubled since 2019 in many neighborhoods, while household incomes had grown by perhaps 15 to 25 percent over the same period. This widening gap between price levels and income levels naturally reduced the pool of qualified buyers and moderated transaction volumes across all segments except the ultra-premium tier, where buyers are less price-sensitive.

Buyer sentiment also shifted significantly. After several years of widespread market optimism and a fear-of-missing-out buying mentality, purchasers became more selective and willing to wait for better conditions. The announcement of the 57,000-unit supply pipeline for 2026-2027 encouraged some potential buyers to defer purchases in anticipation of increased choice and potentially softer pricing. Market commentary shifted from “buy now before prices rise further” to “wait and see what the new supply brings.”

The 31 percent decline, while dramatic in percentage terms, must be contextualized against the elevated base of H1 2024, which itself benefited from a surge in activity as buyers sought to lock in rates before expected increases. Absolute volume levels in H1 2025, while lower than the prior year, remained well above pre-2020 levels, indicating that the market’s structural expansion had not reversed — it had merely normalized from an unsustainably high pace.

Transaction Volume by Property Type

Riyadh’s transaction volume composition by property type has evolved significantly over the past five years, reflecting changing buyer preferences, developer activity, and government policy direction.

Land transactions have historically constituted a large share of total transaction volume by value — a characteristic of the Saudi market that distinguishes it from more mature markets where completed unit transactions dominate. Raw land purchases serve multiple purposes in the Saudi context: as a store of value for wealthy families, as a development input for small and medium developers, and as a long-term speculation vehicle for investors betting on infrastructure-driven appreciation. Land transaction volumes are particularly sensitive to speculative sentiment and have shown the greatest volatility during market inflection points.

In the emerging northern corridor — Al-Narjis, Al-Arid, Al-Qirawan — land transactions form a particularly high proportion of total activity. These districts, where infrastructure development is ongoing and residential construction has not yet reached maturity, attract speculative land purchases from investors anticipating the value uplift that accompanies road construction, utility installation, and the arrival of retail and educational amenities. Land prices in these areas, ranging from SAR 1,500 to SAR 3,500 per square meter, compare to SAR 5,000 to SAR 12,000 per square meter for prime developed land in established neighborhoods.

Apartment transactions have gained share steadily, driven by several factors. The government’s encouragement of higher-density development, particularly through NHC and ROSHN projects that include substantial apartment components, has increased the supply of apartment inventory. Demographic shifts — including the growing proportion of younger, smaller households and the increasing acceptance of apartment living among Saudi families — have expanded the demand pool. And price considerations play a role: apartments offer a more accessible entry point for first-time buyers, with units available from SAR 350,000 in secondary locations compared to the SAR 1.2 million minimum for even modest villas.

Villa transactions remain the most valued segment on a per-unit basis but have seen their share of total transaction count decline. The traditional Saudi preference for villa living — driven by cultural norms around family privacy, multigenerational household structures, and the prestige associated with standalone homes — continues to support villa demand among established families and higher-income households. However, the price premium required for villas increasingly limits this segment to the upper portion of the income distribution.

Mortgage-Driven Transaction Dynamics

The relationship between mortgage origination activity and transaction volumes is direct and measurable. In 2025, new mortgage contracts totaled 108,795 with a combined value of SAR 80.42 billion (approximately USD 21.43 billion) — representing an 11 percent decline in contract numbers and an 11.7 percent decline in value compared to 2024. This mortgage contraction tracks closely with the overall transaction volume decline, confirming the central role of mortgage finance in driving market activity.

The mortgage volume decline of 2025 stands in stark contrast to the 17.1 percent growth recorded in 2024, when lower rates and strong economic sentiment drove a surge in origination activity. The swing from positive 17.1 percent growth to negative 11 percent represents one of the largest year-over-year shifts in Saudi mortgage market history and underscores the sensitivity of transaction volumes to financing conditions.

Looking at the composition of mortgage activity, floating-rate mortgages grew at 14.4 percent while fixed-rate mortgages grew at only 3.1 percent. This divergence reflects borrower expectations about the interest rate trajectory — those who believe rates will decline prefer floating-rate products that will automatically adjust downward, while those who are uncertain or expect rates to remain elevated prefer the certainty of fixed rates. The preference for floating-rate products suggests that the market consensus anticipates further rate reductions from SAMA.

The concentration of mortgage origination among the top three banks — which control approximately 80 percent of new mortgage issuance — creates a market structure where the lending policies of a small number of institutions have outsized impact on transaction volumes. Changes in credit standards, approval timelines, or pricing at any of these three banks can produce measurable shifts in market-wide transaction activity. Al Rajhi Bank at 4.64 percent on 25-year terms, Alawwal Bank at 4.55 percent on 30-year terms, and NCB at 4.40 percent on 20-year terms anchor the mortgage pricing landscape.

The banking system’s loan-to-deposit ratio of 113 percent indicates that banks are lending more than their deposit base supports, relying on interbank markets and capital markets funding. Credit to the private sector grew 10.4 percent in 2025, outpacing deposit growth of 8.7 percent. This imbalance, while manageable in a growing economy, constrains the capacity for unlimited mortgage expansion and may moderate future volume growth.

Buyer Demographics and Composition Shifts

Riyadh’s buyer composition has evolved as the market has matured and regulatory changes have opened new channels of participation.

Saudi first-time buyers continue to represent the largest single category by transaction count, supported by Sakani subsidized financing and the government’s homeownership drive. In 2024, the Sakani program served 117,000 families, a 9 percent increase over 2023, with 93,000 families moving into their new homes during the year. The recent lowering of the minimum eligibility age from 25 to 20 (effective May 2025) has expanded the potential beneficiary pool, though the practical impact depends on the income and creditworthiness profiles of the newly eligible cohort.

The Sakani points system determines priority for support, with households earning under SAR 3,000 monthly receiving the highest priority (20 points). Larger families move up in the queue, and financial capability determines the product type offered — ready units for those who can service larger mortgages, self-construction support for those with existing land, and subsidized land for those at the lowest income levels. The program’s subsidized mortgage offers up to SAR 500,000 interest-free, with support allocated for up to 20 years on mortgage terms of up to 25 years.

Saudi upgraders and second-home buyers represent a growing share of transaction activity. These established homeowners, trading up to larger or better-located properties, are less dependent on subsidized financing and more sensitive to price-value considerations. Their participation contributes to market liquidity by creating both buy-side and sell-side transaction pairs.

Corporate buyers contribute to volume particularly in compound and serviced apartment segments. The RHQ program has amplified corporate purchasing as multinational companies acquire or lease residential units for relocating executives. Each major corporate relocation generates housing demand for dozens to hundreds of employees, creating concentrated demand surges in specific neighborhoods.

Foreign buyers are the newest and potentially most transformative category. The foreign ownership law effective January 22, 2026 — Royal Decree M/14 — opened residential property ownership to non-Saudi residents and entities. Under the geographic zoning model administered by REGA, foreign buyers can purchase apartments, villas, townhouses, and commercial properties within approved zones. Non-Saudi residents outside approved zones can still own one residential unit for personal use. Transaction fees of up to 5 percent apply for non-Saudi purchases, in addition to the standard 5 percent RETT.

Market estimates project that foreign buyer participation could expand demand by 40 to 60 percent in premium segments. The expatriate professional community in Riyadh — growing rapidly due to Vision 2030 programs and corporate relocations — represents a substantial untapped demand pool that was previously limited to the rental market.

Geographic Distribution of Activity

Transaction activity varies significantly across Riyadh’s geographic zones. Northern Riyadh consistently captures the largest share by both count and value, reflecting the alignment of new supply, qualified buyer concentration, and infrastructure quality. The premium neighborhoods of Al-Malqa, Hittin, and Al-Nakheel dominate the high-value transaction segment, while emerging districts like Al-Narjis, Al-Arid, and Al-Qirawan show the fastest volume growth rates as new inventory becomes available.

Central Riyadh — including downtown and the Diplomatic Quarter — shows stable but mature transaction activity concentrated in resale markets. Southern Riyadh districts offer the lowest entry prices but also the lowest volumes and liquidity, though metro connectivity improvements could shift this pattern over time.

Off-Plan Transaction Growth under Wafi

Off-plan transactions regulated under the Wafi program have become an increasingly important component of Riyadh’s volume. In 2023, Wafi authorized 101,942 units for sale across 434 licensed projects, with 350 qualified developers and 42,180 units under construction. The program’s mandatory escrow accounts, milestone-based fund release, and 1,130 field inspections (up 28 percent year-over-year) provide meaningful buyer protection.

Off-plan purchasing appeals to buyers for price discounts (typically 10 to 25 percent versus completed units), extended payment schedules, and unit selection advantages. However, risks include market volatility during the 2-to-4-year construction period and potential delivery delays. The Wafi regulatory framework, while robust, has not yet been tested by a severe market downturn.

Volume Outlook and Recovery Trajectory

The consensus view is that Riyadh’s residential transaction volumes will stabilize and begin recovering in 2026, supported by lower interest rates (SAMA repo at 5.00 percent with room for further cuts), the foreign ownership opening, continued government housing investment through NHC and ROSHN, and the natural absorption of the supply pipeline. However, a return to the peak volumes of 2022-2024 appears unlikely in the near term as the market transitions from its initial mortgage-driven surge to a more sustainable cadence of activity.

Leading indicators including mortgage pre-approval trends, Sakani registration rates, developer launch activity, and interest rate trajectory will provide the earliest signals of volume recovery direction. The transaction volume data tells a clear story: Riyadh’s residential market has matured from a momentum-driven boom into a more normalized environment where volumes reflect fundamental demand-supply dynamics rather than speculative sentiment.

Foreign Ownership Volume Impact

The January 2026 foreign ownership law represents an additional volume catalyst that historical data cannot capture. By enabling non-Saudi buyers to participate in Riyadh’s residential market for the first time, the law expands the transaction base beyond the domestic population. Early transaction data from the post-law period will provide critical evidence on whether international buyer demand materializes at volumes sufficient to offset the domestic cooling trend. Market participants should monitor foreign buyer transaction registrations through the Saudi Properties portal to assess this new demand channel’s contribution to overall volume trends and pricing dynamics.