Samer Choucair: Saudi Housing Is Shifting from Demand Expansion to Price and Quality Management
Investment leader Samer Choucair said the decline in new residential mortgage financing for individuals to SAR 5.87 billion in July 2026, down 9% year on year but up 3% from June, should not be interpreted as a collapse in demand. Instead, it reflects a transition from rapid market expansion toward a more disciplined repricing of affordability.
Choucair said banks originated approximately 9,600 contracts during July. Villas accounted for SAR 3.71 billion, or 63% of new financing, compared with SAR 1.83 billion for apartments and SAR 335 million for land. Financing companies contributed another SAR 267 million, representing annual growth of nearly 44%, bringing total new financing to approximately SAR 6.1 billion.
A Large Mortgage Base, but Slower Growth
Samer Choucair noted that outstanding real-estate loans held by Saudi banks reached SAR 967.9 billion by the end of the first quarter of 2026, up 6% year on year. Individuals accounted for SAR 740.5 billion, or roughly 77% of the total portfolio.
According to Choucair, the market is not suffering from a shortage of credit. The more important development is a slowdown in new mortgage origination following several years of rapid expansion.
He added that the Saudi repo rate remained at 4.25% during the first half of the year after being reduced in late 2025, while inflation remained broadly below 2% annually. Lower financing costs have improved debt-servicing capacity, Choucair said, but they have not fully offset the impact of higher residential property prices, particularly in Riyadh.
A “Volatile Bottom,” Not a Structural Collapse
Samer Choucair said the roughly 30% decline in the value of mortgage contracts and the approximately 21% drop in contract volumes during the first half of the year point to a market undergoing adjustment rather than structural deterioration.
May financing fell to SAR 4.37 billion, down more than 40% year on year, while April rose to SAR 6.33 billion and June stabilized around SAR 5.7 billion, recording 7% annual growth.
Choucair described the pattern as a “volatile bottom” rather than a housing-market collapse.
He added that the alternative financing program launched by the Real Estate Development Fund in July, in partnership with Saudi National Bank and the National Housing Company, has helped redirect demand toward first-time homeownership. The program offered monthly installments starting from SAR 699 in Riyadh, Jeddah, and Dammam.
More than SAR 1 billion in housing support was deposited in July, while total support since the beginning of the year reached SAR 7.6 billion, reinforcing the policy focus on enabling first-home purchases rather than simply maximizing transaction volumes.
Housing and Vision 2030
Choucair said Saudi household homeownership reached 66.24% by the end of 2025, compared with 47% before the launch of Vision 2030, bringing the market closer to the government’s 70% target for 2030.
More than 63,000 Saudi families moved into their first homes during the first half of 2026, while the National Housing Company has targeted the development of more than 600,000 housing units within a portfolio valued at approximately SAR 250 billion at the end of 2025.
Samer Choucair added that the Saudi Real Estate Refinance Company’s 26-basis-point reduction in long-term financing rates for maturities between 20 and 30 years could provide further support to mortgage origination during the fourth quarter.
A Repricing of Risk
“What we are seeing is not capital leaving the housing market,” Samer Choucair said. “It is capital repricing risk within the housing market.”
Choucair argued that the advantage is increasingly shifting toward developers capable of delivering mid-priced housing and toward investors focused on high-quality mortgage portfolios, refinancing platforms, housing infrastructure, and property technology.
In this environment, the strongest investment proposition is no longer simply exposure to rising transaction volumes. Instead, investors are becoming more selective about affordability, borrower quality, project economics, and the durability of cash flows.
That shift also changes the competitive dynamics among developers. Companies that can control construction costs, deliver units within realistic household affordability ranges, and maintain access to long-term financing could be better positioned than developers relying primarily on continued price appreciation.
The Investment Outlook
Choucair expects monthly residential mortgage financing to remain broadly within a SAR 5 billion to SAR 6.5 billion range for the remainder of 2026, reflecting a market that is still active but increasingly disciplined.
The next phase of Saudi housing, he said, will be less about maximizing the pace of mortgage growth and more about improving affordability, underwriting quality, supply discipline, and the efficiency of financing channels.
“The advantage no longer belongs to the investor chasing the highest growth in mortgage contracts,” Samer Choucair concluded. “It belongs to the investor buying visible cash flows, lower risk, and a longer holding period.”