The local real estate market ended its activity during September, with a record annual decline in the total value of its deals, which reached 34.3 percent, compared to its level during the same month of last year, bringing the total value of real estate deals by the end of the month to below the level of 11.7 billion riyals. , Compared to about 17.8 billion riyals during the same month last year. This record decline in real estate market transactions is attributed to the fact that most real estate and consumer transactions were affected by the application of the basic value-added tax at its new rate of 15 percent, which began at the beginning of last July, and is expected to end after the royal decree was issued at the end of last week. Judge to exempt real estate supplies from the 15 percent value-added tax, and to start applying the real estate disposal tax to real estate supplies amounting to 5 percent of the total value of disposal of real estate.
The annual decline in the value of real estate deals included both the residential sector and the total commercial, agricultural and industrial sectors, as the residential sector recorded a record annual decline of 40.9%, to settle at the end of last month at below the level of 8.2 billion riyals, compared to about 13.8 billion riyals during the same month From last year. While the total commercial, agricultural and industrial sectors recorded the lowest annual decline, compared to the residential sector, where the decrease did not exceed 5.2 percent, so that the total value of the sector’s deals at the end of the month settled at the level of 3.5 billion riyals, compared to about 3.7 billion riyals during the same month of last year.
Regarding the performance of the first nine months of the current year for the local real estate market, the total value of real estate deals during the period recorded an annual decline, reaching 13.1 percent, compared to the same period last year, so that the total real estate deals at the end of the period settled below the level of 114.3. One billion riyals, compared to the level of 131.5 billion riyals during the same period last year. The performance of the residential sector and the rest of the market sectors varied at the level of the value of real estate deals, as the total value of housing sector deals recorded an annual decline of 15.8 percent, to settle at the end of the period at the level of 82.3 billion riyals, compared to about 97.8 billion riyals during the same period last year, while it recorded The total value of deals in the commercial, agricultural and industrial sectors increased slightly annually for the same period, not exceeding 0.1 percent, stabilizing at the end of the period at the level of 80.3 billion riyals.
Real estate disposal tax implementation
The Royal Decree was issued at the end of last week, to exempt real estate supplies from the 15 percent value-added tax, and to start applying the real estate disposal tax to real estate supplies amounting to 5 percent of the total value of disposing of real estate, regardless of its condition, shape or use at the time of disposal, It includes the land and what is constructed, constructed or built on it, whether the disposal is focused on it in its condition or after the establishment of facilities on it, and whether this disposition includes the entire property, or any part of it detached, communal, housing unit or other types of real estate, and whether the disposition is Documented or not documented. And it is collected upon documenting the real estate disposition, and the honorable royal decree also stipulated that the state's bearing of that tax increases to no more than 1.0 million riyals from the purchase price of the first home for the citizen, and that work begins with what is included in the royal decree from the date of October 4.
In light of these important developments on the market, it is expected that the local real estate market activity will escalate with it period after period, and that the weekly market transactions will witness a steady growth in the value of real estate deals of all kinds, and at the same time, the market will anticipate the potential impact of starting the implementation of the second phase of the fee system on White lands in Riyadh, Jeddah and Dammam, during the first quarter of next year, in addition to starting work to implement the first phase of the system in 17 additional cities before the end of this year, and with the beginning of next year, and it is expected that all these fundamental developments will affect the performance of The real estate market, and to push it to more activity, and to reduce speculation operations on land within cities and their suburbs, which will be followed up on its developments and implications for market activity on the one hand, and on the other hand on the levels of market prices for various real estate assets during the coming period through this report weekly.
Developments in mortgage loans to individuals
New real estate loans granted to individuals continued their steady rise, which started remarkably since the beginning of last year. According to the latest monthly data issued by the Saudi Arabian Monetary Agency, the total number of new mortgage loans granted to individuals from banks and financing institutions is higher than 10.1 billion riyals (not including the interest amount. On financing) by the end of August 2020, registering a record annual growth of 93.9%, and with it the number of individual borrowers during the same period increased by 83.4%, bringing their total number by the end of August to about 578.3 thousand individual borrowers.
These new real estate loans granted to individuals during the first eight months of this year recorded a record growth of 89.5 percent, and their total balance during the period reached about 83.4 billion riyals (not including the amount of interest on financing), compared to about 44.0 billion riyals (not including The amount of interest on financing) during the same period last year, and it is noticed from a comparison of data during the period related to real estate loans granted to individuals issued by the Saudi Arabian Monetary Agency on the one hand, and data related to the total value of housing sector deals issued by the Ministry of Justice on the other hand, that the total loans Real estate for individuals 83.4 billion riyals (not including the interest on financing), the total value of residential sector deals, which amounted to 74.2 billion riyals, has exceeded during the same period.
t is estimated that the volume of real estate loans granted to individuals is estimated to rise to about 296 billion riyals by the end of the last third quarter, and to record an annual growth of 53.8 percent, compared to its size at the end of the third quarter of last year (192.5 billion riyals), and to increase The number of individuals who obtained real estate loans at the end of the same period was higher than 598.3 thousand borrowers, and to record an annual growth of more than 80.2 percent, compared to their numbers at the end of the same quarter of last year (332.1 thousand borrowers), i.e. an annual increase of more than 266.2 thousand Borrowed during the period.