meed-logo

line1 line2 line3
SIGN IN / REGISTER

Saudi Arabia’s housing boom risks leaving citizens behind

23 October 2025

Saudi Arabia is in the middle of one of the biggest housing drives in its history. Across Riyadh, Jeddah and the Eastern Province, entire neighbourhoods are taking shape, funded by government initiatives and ambitious developers. 

The ambition is clear: raise living standards, push homeownership towards Vision 2030’s 70% target, and showcase modern Saudi life.

But here is the uncomfortable reality: homes are being built, yet many Saudis cannot afford them.

No one doubts the appetite for housing. Saudi families have always valued owning a home, and with such a young population, the demand is only growing. But affordability is slipping away.

According to Knight Frank, the number of families planning to buy fell sharply, from 40% in 2023 to 29% in 2024. Prices keep climbing: in Riyadh alone, apartment values rose almost 11% last year, while villas increased even more. Salaries, however, have hardly moved. The result is a widening gap between what people want and what they can realistically buy.

Wrong market

Much of today’s housing pipeline is designed for the top end. Villas and apartments that are priced at SR2-SR4m ($533,333-$1.07m) are now common, while surveys show that two-thirds of Saudi households can only afford about SR1.2m or less.

Developers understandably chase higher margins, building bigger homes with luxury finishes. But this leaves out the very group the government most wants to support: young, middle-income families. Land costs make the situation worse. Speculative buying has pushed land far out of reach, and those costs inevitably pass down to buyers.

Imported designs

International developers have entered the market with big ideas and sleek designs. Yet too often, their projects look as though they are meant for global investors or expatriates, not for Saudi households. Tower blocks and gated compounds may look impressive, but they do not always reflect local family life, or income levels.

Then there is infrastructure. Building communities is not just about homes, but also schools, hospitals, roads, utilities and parks. Those upfront costs are huge, and developers usually recoup them through higher sale prices. Once again, it is the local buyer who feels the squeeze.

Financing difficulties

Rising mortgage rates add another hurdle. With the Saudi central bank following US interest rate moves, borrowing has become more expensive. What might have been an affordable monthly payment two years ago is now out of reach for many young families.

Tower blocks and gated compounds may look impressive, but they do not always reflect local family life, or income levels

Saudi Arabia is opening its property market to foreign investors. That brings in capital and supports diversification. But if supply for citizens is not guaranteed first, the risk is clear: locals may be priced out of their own housing market.

The government is aware of these issues. The Ministry of Housing is rolling out schemes, financing tools and regulations. But more is needed. Policies must:

  • Match new homes to actual income levels, not just investor targets
  • Curb speculation and make land more accessible
  • Expand subsidised mortgages for first-time buyers
  • Open the market to foreigners gradually, after domestic needs are met.
Inclusivity goal

Housing is one of the most visible promises of Vision 2030. It symbolises progress, modernisation and opportunity. But unless the current course is corrected, many of these new developments could end up as exclusive enclaves rather than inclusive communities.

Saudi Arabia has the money, the demand and the ambition. The challenge now is to connect all three, so that the homes rising across its skylines are not just impressive projects, but real homes that reflect the aspirations of ordinary Saudis.

https://image.digitalinsightresearch.in/uploads/NewsArticle/14914004/main.jpg
MEED Editorial

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles