Official data issued by the General Authority for Statistics in the Kingdom of Saudi Arabia show a continued decline in real estate prices, with the overall index recording an annual decrease of 0.7% in the fourth quarter of 2025 compared to the same period in 2024. This downturn reflects ongoing pressure in the local property market amid a new state of balance between supply and demand.
The residential sector leads the decline
According to the authority, the weak performance of the residential sector was the main driver behind this decline, as it carries significant weight in the overall index due to its larger relative share.
Residential property prices fell by 2.2% year on year, directly contributing to the drop in the general index. This was driven by weaker demand for housing units in contrast to increased supply in some areas, which put downward pressure on prices.
Commercial sector continues to grow despite challenges
On the other hand, the commercial sector delivered a more stable performance, recording positive annual growth of 3.6%, despite a slight slowdown in the pace of growth compared to previous periods.
This resilience reflects continued demand for commercial assets, supported by business activity and the expansion of commercial and service projects, which helped limit the impact of the broader downturn in the Saudi real estate market.
A signal of market reshaping
These developments point to a transitional phase in the Kingdom’s real estate market as it seeks to reach a new equilibrium between supply and demand levels. While the residential sector faces clear challenges pushing it toward further decline, the commercial sector remains more resilient thanks to support from economic growth areas and ongoing business activity.
The latest figures confirm the need for close market monitoring and continued efforts to develop strategies that support the desired balance, whether by stimulating domestic demand or managing supply in line with the market’s evolving needs.
