*Analysis/ Abdul Hamid Al-Omari
The weekly performance of the local real estate market fell for the second week in a row, where the total value of its weekly transactions decreased by 2.3%, compared with a 12.3 percent fall in the previous week.
The total value of real estate transactions stabilized at the end of the 14th week of this year at the level of 3.57 billion riyals, compared with the previous level at 3.6 billion riyals.
The seasonal factor intervenes during the current period as the summer approaches in which the real estate market usually has a decline in the value of its transactions.
This relative calm is expected to continue until the end of the third quarter and is punctuated by the holy month of Ramadan and summer vacation, which was evident early on in the business sector, whose trading values have recorded further declines over the past three weeks.
As the catalysts of increased liquidity in the market gradually began to decline, which was driven by an increase in loans granted to military servicemen that has played a role in the rise in real estate activity and price levels during the past few months, for the market to return to the main factors long-term.
All this does not eliminate the importance of continuing the necessary reforms of the real estate market, specifically to emphasize the need to launch the next stages of the system of fees on white land and how quickly the real estate market responds to some of the stimuli on the level of increased mortgage finance and the return of market prices to rise only one of the sure signs of the continuation and strength of distortions inherent in the market.
This confirms the high importance of the continued implementation of the remaining stages of the system of fees on the white land to complete the implementation of all stages specified in accordance with the regulations of the system.
On the level of analysis of local real estate market performance indicators, the index of traded real estate funds declined last week by 0.5%, compared to the previous week's rise of 0.3 percent, as the market value of these funds has decreased by 0.9 percent with an average loss of 15.7 per cent at the end of last week.
Only three funds have a market price higher than the IPO price, compared to 14 real estate funds traded market prices lower than the subscription price with a net loss of SR 2.2 billion at the end of last week, compared to its capital at the time of the IPO.
While the volume of banking facilities granted to these funds and Sukuk remains stable at SR 5.6 billion (38.8 per cent of its capital, 46.1 per cent of its market value) and the stability of the number of real estate funds borrowed or issued Sukuk in nine of the 17 funds traded real estate investment.
Weekly performance of the real estate market
The local real estate market recorded a 12.3 per cent decline at the end of last week's trading compared to a 12.3 per cent fall in the previous week.
The total value of real estate transactions stabilized at the end of the 14th week of this year at the level of 3.57 billion riyals, compared to its previous level of 3.6 billion riyals,
The variation in the weekly change in both the residential and commercial sectors, where the total value of transactions in the residential sector rose slightly by 0.1%, compared with an increase of 8.6% in the previous week.
The total value of transactions at the end of last week reached SAR 2.9 billion.
While the total value of transactions in the commercial sector fell for the third week in a row by 12.1 per cent, compared to a decline of 24.8% during the previous week.
The total value of transactions at the end of last week reached 637 million riyals.
At the level of reading the rest of the weekly performance indicators of the real estate market, the number of real estate transactions rose by 1.6 per cent, compared with a weekly decline of 5.3 per cent to settle at the level of 6447 real estate deal.
The number of properties sold increased by 1.8 per cent, compared to a weekly decline of 6.2% to settle at 6690 selling properties, which reflect the change, whether reversing the change in transaction values or lower if they are consistent in the same direction with the continued decline in the inflated market price averages of the various movable real estate assets.
This is very positive that will continue its "low prices, high deals and sales" from the exit of the local real estate market from the severe recession that has been under way for several years and in turn contributes to overcoming the difficulty of owning land and housing for members of society, under the umbrella of the low inflated prices of various real estate assets.
The volume of real estate transactions rose by 23.3 per cent compared to a decline of 23.1 per cent in the previous week to 19.2 million square meters.
Land and real estate price trends
The short-term price trends, shown by changes in the previous period of this year, show the average prices of land and residential properties on the level of change in the average market prices of residential real estate assets, compared to the first quarter of 2019 with the same quarter last year.
The results were as follows: the average market price of residential villas decreased by 16.7%, then the average market price of residential apartments fell by 10.8%, while the average market price per square meter of residential land was up by 23.9 per cent.
This variation in market price changes between villas and apartments on the one hand and residential land on the other, which reflects the significant increase in the supply of vacant and new housing units that is in contrast to the shrinking supply of residential plots and the absence of any pressure during the current period on its owners, which can contribute to the supply side at market prices or to develop and benefit from them.
On the level of change in average market prices of residential real estate during the previous 12 months to March 31, compared to the same period last year, the results are as follows: annual decline of average market prices of residential villas by 12.0%, annual decline in the average price of apartments by 11.8%, while the average market price per square meter of residential land recorded an annual increase of 7.4 per cent.
Long-term price trends showed a decline in all average land and residential property prices as of March 31 of this year, compared to the annual average market prices of land and real estate for 2014 "peak property".
The results were as follows: the average market prices of residential villas decreased by 34.0%, the average market price per square meter of residential land during the comparison period decreased by 27.6 per cent, then the average price of apartments fell by 22.2%.