The Saudi banks’ new mortgage lending to houses, apartments and lands registered a solid growth, surging by 31.7% to SAR7.14 billion ($1.9 billion) in August from SAR5.43 billion ($1.4 billion) the previous month, reported Arab News, citing data from Saudi Central Bank (SAMA). 

 

New mortgage lending to people buying houses in August also posted a 27.45% increment, it stated.

 

The remarkable growth observed in apartment lending is particularly intriguing, as the banks injected SR1.78 billion into them in August, reflecting a robust 45 percent surge over July.

 

This upswing has been especially noteworthy, as it had witnessed a slowdown in the preceding months, it stated.

 

It came at a pivotal juncture, coinciding with the Shoura Council’s call for a review of policies by the Real Estate Development Fund to benefit the public. 

 

The implications of these changes are expected to significantly impact the housing market and open new avenues for citizens to fulfill their homeownership dreams.

 

"The increase in apartment financing by Saudi banks compared to house financing is due to the increase in prices of houses and private villas compared to the prices of apartments, which has made villas and houses unaffordable to average-income individuals," remarked Talat Zaki Hafiz, an economist and financial analyst.

 

New mortgage lending to people buying houses in August also posted a 27.45 percent increment to SR5 billion compared to the earlier month.

 

Meanwhile, financing for land acquisition recorded a 32.43 percent jump for the month under review to SR399 million, stated the report.

 

Notably, financing of houses still dominates Saudi banks’ new residential mortgage landscape, constituting a 70 percent share in August, it added.

 

Saudi Arabia has been investing in urban development and city planning. As cities grow and modernize, there may be an emphasis on apartment complexes, reported Arab News. 

 

Investment infrastructure and amenities in urban areas can make apartments more attractive to potential homebuyers and renters. 

 

Apartments are often more affordable than single-family houses, making them an attractive option for first-time homebuyers or those with limited budgets, it stated.

 

While apartments comprised 25% of the pie, land financing held the remaining 5 percent. 

 

However, the lending dynamics shift when it comes to finance companies, it stated. 

 

Apartment financing now takes the lead among finance companies, commanding a substantial 57.6% share of the total new residential mortgage market.

 

Finance companies channeled SR177 million into apartment financing in August, compared to SR106 million for house financing, it added.

 

These shifting dynamics suggest a noteworthy change in the lending landscape, highlighting the growing popularity of apartment ownership among Saudi citizens, said the report.

 

The dynamics of lending in the real estate sector, including apartment versus housing lending, can be influenced by various factors and market conditions, it added.