Saudi mortgage lending drops to nine-year low

• Down 56% year on year
• Property price rises deter buyers
• Questions over foreign ownership

Residential mortgage lending in Saudi Arabia has recorded its steepest year-on-year decline in nearly nine years, according to central bank data.

The Saudi Central Bank figures for November 2025, published last week, highlight the strain in the country’s housing market after a prolonged period of price growth.

The value of new residential mortgages provided by banks to individuals was about SAR4.5 billion ($1.2 billion) for the month. This is 56 percent down on the figure for November 2024 – and represents the biggest year-on-year decline since January 2017.

The number of new mortgages also dropped. Banks made 6,773 deals in the month, down from 13,142 in November 2024. The average loan was for roughly SAR660,000.

Analysts say the pullback reflects a combination of affordability pressures, policy uncertainty and buyer sentiment after rapid price increases in Riyadh.

House prices in the capital have almost doubled over the past five years for certain units, an increase that Crown Prince Mohammed bin Salman described last September as “unacceptable”.

Faisal Durrani, head of research at Knight Frank Mena, told AGBI last month the market appeared to have reached a cyclical peak in pricing.

“Income levels have not risen at the same pace, which has resulted in declining home sales volumes and also declining total transactional values,” he said.

The mortgage slowdown is unfolding as Saudi Arabia prepares to introduce large-scale foreign property ownership. From January 22, non-Saudis will be permitted to buy residential property across much of the kingdom for the first time.

However, the details of how the rules will be implemented have yet to be published, creating uncertainty among developers, lenders and buyers. 

The Real Estate General Authority has not announced which areas will be open to foreign buyers, nor clarified the regulatory framework around escrow accounts, financing options and investor protections.

“We need to see more details on the rules and regulations,” Durrani said. “Without that, it’s very difficult to forecast the immediate impact on transactions.”

At the same time, the government is attempting to rein in housing costs through amendments to the so-called white land tax, which penalises landowners for holding vacant or underdeveloped plots. The changes are designed to push more land into development and ease price pressures.