Saudis waiting for lower housing unit prices

Saudis waiting for lower housing unit prices
Updated 01 February 2015

Saudis waiting for lower housing unit prices

Saudis waiting for lower housing unit prices

The prices of housing units are expected to decrease due to the low prices of building materials which dropped by a staggering 25 percent. Steel prices also fell globally to reach 20 percent at the end of 2014 and are expected to decline further in the coming months, according to experts.
The demand for building materials had dropped by 50 percent in 2014 due to the low demand for housing units which caused a sharp disparity in supply and demand in the local market. While citizens hope to see a further fall in the prices of housing units, many landlords will not respond to the new change in building material prices as they prefer to keep the prices at the current levels.
“The main problem of the Saudi market is that it is unable to respond to the global changes in prices of commodities and housing units. Several landlords and owners will refuse to reduce the price of their housing units and instead take advantage of the low cost of building materials to sell them at high prices or rent them out,” Dr. Fadal Abu Al-Ainain, an economic expert told Arab News. He added that they aim to make good profits in the short or medium term at least.
He pointed out that this trend will not be able to continue in the long term. “These prices will be forced to come down as a result of the expected recession in the real estate market in the Kingdom,” he said. He advised Saudis and expats to wait for at least one year to take advantage of the low housing unit prices which are expected to return to the levels in 2005.
Meanwhile, Custodian of the Two Holy Mosques King Salman’s directives last Thursday to grant SR 20 billion for the implementation of electricity and water projects to develop schemes in different regions and provinces has brought new hope to Saudis for a reduction in property prices in the coming period, according to a local daily.
Abdullah Al-Sheheri, a dealer in the real estate market said the Royal Decree will develop several lands for housing projects in different regions which will increase the supply ratio against the demand rate.
“Housing unit prices will stand to return to the levels they were 15 years ago,” he stated.