There is a higher ceiling for real estate prices

He attributed the reason for the “rises bubble” to the correlation of real estate financing with per capita income

An economist who is interested in the real estate market confirmed that there is a higher ceiling for real estate prices that cannot be exceeded, after the bubble of recent rises in the market, which many described as exaggerated, noting that the reason for this is because real estate financing is mostly related to the individual’s income.

He explained that the equation shows that the higher the prices, the lower the size of the segment that can buy these properties, or it may move from research in the villas sector to the apartments sector; Which will force prices to return to equilibrium.

And he indicated that the solutions and legislation developed by the concerned authorities in Saudi Arabia, including the real estate stock exchange, white land fees, projects of the Ministry of Housing, and others; It will have a significant positive impact on the real estate market in the future in terms of prices, supply and the purchasing power of the citizen.

In detail, Professor of Finance and Investment at King Saud University, who is interested in real estate finance and building indicators, Dr. Saeed Nasser Al-Qahtani, told “Previously”: The rise in real estate prices is not a phenomenon confined to our local market only, but a phenomenon that affected many global markets, explaining that one of the most important causes The economic stimulus policies that many countries have undertaken to reduce the cost of borrowing in the debt market to help governments, companies and individuals borrow at a low cost to support private sector investments and preserve jobs during the pandemic.

He added that as a result, the cost of real estate financing decreased, and everyone could ride this wave and obtain financing at a low cost, so liquidity increased, and with it the demand for real estate increased, so its prices rose.

Al-Qahtani continued: “With regard to the local reasons affecting the real estate sector, most notably the weak legislation and its inability to prevent speculative beneficiaries, which allowed speculative practices to crowd out the searcher for housing,” noting that the owner of the first home “First-Time Home Buyer” is facing difficulties. In the search for housing as a result of these practices. Another reason is the instability in the rental market, which has led many individuals to own property at such high prices.

He went on to say that there is a price ceiling that cannot be crossed; Since most real estate transactions are related to income, real estate financing will not be carried out by banks and financial institutions until after verifying the eligibility of the customer’s income; Therefore, the higher the prices, the lower the size of the segment that can buy or may move from searching in the villas sector to the apartments sector; Meaning that the segment of clients of residential villas previously will crowd out the segment of clients of apartments currently.

Al-Qahtani said: “It is expected in the short term that prices will continue to rise in the residential apartments sector, especially since apartments are classified as shelter, and it is more essential than real estate and the first degree in the scale of home ownership.”

He continued, “Also, with the rise in prices in the residential apartments sector and the failure to add new housing units through housing programs, it will have a negative impact during the next few years on the residential real estate market rents, and thus the cost of rent, and this effect may be delayed due to the linkage of lease contracts. over a period of time.”

He added that it is also expected in the near term that prices will continue to rise due to the length of time that the real estate product needs to be displayed in the market, and because of the recent legislation of the code and others, which will reduce the pace of real estate supply, which we have begun to see effects in the decrease in the sales of cement companies in the last period. “.

He said, “In the long run, real estate prices are expected to decline, especially after the completion of the economic stimulus programs and with the expected rise in interest rates in the debt market, which the Fed recently announced by reducing its purchases of debt instruments, which may be accompanied by raising interest rates during the middle of the year.” Next”.

He added: “The cost of real estate financing will therefore rise, decrease liquidity and decrease demand with it, thus reducing prices. On the other hand, after the completion of the projects of the Ministry of Municipal and Rural Affairs and Housing, and the increase in housing supply, which will contribute to reducing real estate prices. In addition to improving legislation and increasing the level of transparency through the real estate exchange platform And the many services it will provide, for example, raising the quality of the real estate brokerage sector and ensuring a minimum level of quality that will contribute to price stability in the future.”

The trend will be for apartments.. Economy for “Previously”: There is a higher ceiling for real estate prices that we will not exceed


already

An economist who is interested in the real estate market confirmed that there is a higher ceiling for real estate prices that cannot be exceeded, after the bubble of recent rises in the market, which many described as exaggerated, noting that the reason for this is because real estate financing is mostly related to the individual’s income.

He explained that the equation shows that the higher the prices, the lower the size of the segment that can buy these properties, or it may move from research in the villas sector to the apartments sector; Which will force prices to return to equilibrium.

And he indicated that the solutions and legislation developed by the concerned authorities in Saudi Arabia, including the real estate stock exchange, white land fees, projects of the Ministry of Housing, and others; It will have a significant positive impact on the real estate market in the future in terms of prices, supply and the purchasing power of the citizen.

In detail, Professor of Finance and Investment at King Saud University, who is interested in real estate finance and building indicators, Dr. Saeed Nasser Al-Qahtani, told “Previously”: The rise in real estate prices is not a phenomenon confined to our local market only, but a phenomenon that affected many global markets, explaining that one of the most important causes The economic stimulus policies that many countries have undertaken to reduce the cost of borrowing in the debt market to help governments, companies and individuals borrow at a low cost to support private sector investments and preserve jobs during the pandemic.

He added that as a result, the cost of real estate financing decreased, and everyone could ride this wave and obtain financing at a low cost, so liquidity increased, and with it the demand for real estate increased, so its prices rose.

Al-Qahtani continued: “With regard to the local reasons affecting the real estate sector, most notably the weak legislation and its inability to prevent speculative beneficiaries, which allowed speculative practices to crowd out the searcher for housing,” noting that the owner of the first home “First-Time Home Buyer” is facing difficulties. In the search for housing as a result of these practices. Another reason is the instability in the rental market, which has led many individuals to own property at such high prices.

He went on to say that there is a price ceiling that cannot be crossed; Since most real estate transactions are related to income, real estate financing will not be carried out by banks and financial institutions until after verifying the eligibility of the customer’s income; Therefore, the higher the prices, the lower the size of the segment that can buy or may move from searching in the villas sector to the apartments sector; Meaning that the segment of clients of residential villas previously will crowd out the segment of clients of apartments currently.

Al-Qahtani said: “It is expected in the short term that prices will continue to rise in the residential apartments sector, especially since apartments are classified as shelter, and it is more essential than real estate and the first degree in the scale of home ownership.”

He continued, “Also, with the rise in prices in the residential apartments sector and the failure to add new housing units through housing programs, it will have a negative impact during the next few years on the residential real estate market rents, and thus the cost of rent, and this effect may be delayed due to the linkage of lease contracts. over a period of time.”

He added that it is also expected in the near term that prices will continue to rise due to the length of time that the real estate product needs to be displayed in the market, and because of the recent legislation of the code and others, which will reduce the pace of real estate supply, which we have begun to see effects in the decrease in the sales of cement companies in the last period. “.

He said, “In the long run, real estate prices are expected to decline, especially after the completion of the economic stimulus programs and with the expected rise in interest rates in the debt market, which the Fed recently announced by reducing its purchases of debt instruments, which may be accompanied by raising interest rates during the middle of the year.” Next”.

He added: “The cost of real estate financing will therefore rise, decrease liquidity and decrease demand with it, thus reducing prices. On the other hand, after the completion of the projects of the Ministry of Municipal and Rural Affairs and Housing, and the increase in housing supply, which will contribute to reducing real estate prices. In addition to improving legislation and increasing the level of transparency through the real estate exchange platform And the many services it will provide, for example, raising the quality of the real estate brokerage sector and ensuring a minimum level of quality that will contribute to price stability in the future.”

November 24, 2021 – Rabi’ al-Akhir 19, 1443

08:42 PM


He attributed the reason for the “rises bubble” to the correlation of real estate financing with per capita income

An economist who is interested in the real estate market confirmed that there is a higher ceiling for real estate prices that cannot be exceeded, after the bubble of recent rises in the market, which many described as exaggerated, noting that the reason for this is because real estate financing is mostly related to the individual’s income.

He explained that the equation shows that the higher the prices, the lower the size of the segment that can buy these properties, or it may move from research in the villas sector to the apartments sector; Which will force prices to return to equilibrium.

And he indicated that the solutions and legislation developed by the concerned authorities in Saudi Arabia, including the real estate stock exchange, white land fees, projects of the Ministry of Housing, and others; It will have a significant positive impact on the real estate market in the future in terms of prices, supply and the purchasing power of the citizen.

In detail, Professor of Finance and Investment at King Saud University, who is interested in real estate finance and building indicators, Dr. Saeed Nasser Al-Qahtani, told “Previously”: The rise in real estate prices is not a phenomenon confined to our local market only, but a phenomenon that affected many global markets, explaining that one of the most important causes The economic stimulus policies that many countries have undertaken to reduce the cost of borrowing in the debt market to help governments, companies and individuals borrow at a low cost to support private sector investments and preserve jobs during the pandemic.

He added that as a result, the cost of real estate financing decreased, and everyone could ride this wave and obtain financing at a low cost, so liquidity increased, and with it the demand for real estate increased, so its prices rose.

Al-Qahtani continued: “With regard to the local reasons affecting the real estate sector, most notably the weak legislation and its inability to prevent speculative beneficiaries, which allowed speculative practices to crowd out the searcher for housing,” noting that the owner of the first home “First-Time Home Buyer” is facing difficulties. In the search for housing as a result of these practices. Another reason is the instability in the rental market, which has led many individuals to own property at such high prices.

He went on to say that there is a price ceiling that cannot be crossed; Since most real estate transactions are related to income, real estate financing will not be carried out by banks and financial institutions until after verifying the eligibility of the customer’s income; Therefore, the higher the prices, the lower the size of the segment that can buy or may move from searching in the villas sector to the apartments sector; Meaning that the segment of clients of residential villas previously will crowd out the segment of clients of apartments currently.

Al-Qahtani said: “It is expected in the short term that prices will continue to rise in the residential apartments sector, especially since apartments are classified as shelter, and it is more essential than real estate and the first degree in the scale of home ownership.”

He continued, “Also, with the rise in prices in the residential apartments sector and the failure to add new housing units through housing programs, it will have a negative impact during the next few years on the residential real estate market rents, and thus the cost of rent, and this effect may be delayed due to the linkage of lease contracts. over a period of time.”

He added that it is also expected in the near term that prices will continue to rise due to the length of time that the real estate product needs to be displayed in the market, and because of the recent legislation of the code and others, which will reduce the pace of real estate supply, which we have begun to see effects in the decrease in the sales of cement companies in the last period. “.

He said, “In the long run, real estate prices are expected to decline, especially after the completion of the economic stimulus programs and with the expected rise in interest rates in the debt market, which the Fed recently announced by reducing its purchases of debt instruments, which may be accompanied by raising interest rates during the middle of the year.” Next”.

He added: “The cost of real estate financing will therefore rise, decrease liquidity and decrease demand with it, thus reducing prices. On the other hand, after the completion of the projects of the Ministry of Municipal and Rural Affairs and Housing, and the increase in housing supply, which will contribute to reducing real estate prices. In addition to improving legislation and increasing the level of transparency through the real estate exchange platform And the many services it will provide, for example, raising the quality of the real estate brokerage sector and ensuring a minimum level of quality that will contribute to price stability in the future.”

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