Saudi Arabia residential land prices registered an 18.7% decline during the first month following the implementation of the White Land Tax law, which aims to readjust the real estate pricing system.
Residential land is considered the most popular and traded real estate asset in the Kingdom of Saudi Arabia. The new law has affected other asset prices and resulted in declines of 7.7% for villas, 27.8% for residential buildings and 6.5% for apartments.
This decline in the prices of real estate assets coincides with the overall market depression that resulted in a lower number of transactions versus the increased prices of the real estate assets offered.
The decline in domestic liquidity levels, that recorded negative growth rates since the beginning of this year and for the first time in more than 21 years, adds to the pressure. Domestic liquidity recorded an annual decrease of 3.2% by the end of last May.
The latest data released recently by the General Authority of Statistics data shows that Saudi Arabia’s GDP also recorded its weakest quarterly performance in several years. The growth rate has declined by 1.5% during the first quarter of 2016, and the private sector witnessed poor performance with an increase that did not exceed 0.2% during the same period.
The market currently faces scarcity of mortgage finance from local banks, financial institutions and the Real Estate Fund, the latter which has not issued a single loan during the past.