The economic writer, Abdul Hameed Al-Omari, expected that the real estate market would witness a new, positive phase in the event of the Central Bank’s decision to reduce the monthly deduction rate to a maximum of 40%.
Al-Omari said that it is possible to read the developments and changes that the real estate market has witnessed since the beginning of the second half of 2022 to date, with a positive vision for the consumer, on the contrary, of course, for the merchants.
He stated that the circle of recession widened until it entered its ninth month in a row, in conjunction with the stampede of several factors, including the cohesion of prices and their continued rise in major cities with high demand, high interest rates, and a decline in loans.
He added that other factors entered the way with the beginning of February 2023, doubling the pressures and simplifying a broader recession, indicating that the recession began to haunt the market with the beginnings of raising interest rates, and the decline in real estate lending to individuals, and before that was the rise in prices, which was the biggest factor.
And he indicated that the new factors were presented through advertisements for housing projects, the two suburbs of Al-Fursan and Khuzam, and then granting 100 million square meters of land in Riyadh and the price-inflated sites under the guidance of Crown Prince His Royal Highness Prince Mohammed bin Salman, and this area exceeds twice the area of land covered by land fees in Riyadh city alone.
And he continued: “The announcement of the new matrix of housing support, and it began working immediately, reduced 80% of their income entitlements greater than 10 thousand riyals, in exchange for increasing its focus on those with lower wages, starting from 3 thousand riyals per month, and the focus of support led to restricting demand to match supply to a large extent. And he will go to bigger twins in the future.”
He added that other factors also included announcing an amendment to the system and regulations for white land fees to increase their efficiency and impact on landowners, especially in cities and locations that are most in demand and high in prices, which will be subject to fees amounting to 10% compared to the previous rate of 2.5%, looking forward to the amendments bearing the calculation of those fees from current market prices. Calculation time.
He pointed out that all of the aforementioned factors have become a reality with increasing influence, adding that the most important and strongest factor remains, which is represented in reducing the monthly bank deduction rate to 40%, and although this percentage is still higher than international standards, it will represent an important factor. And positively to curb price inflation, and it is hoped that the Central Bank will reduce it in the near future to 33% or less, in order to maintain the stability of individuals’ lives, and to reduce the potential risks of default on the financing sector, and for the growth of the economy.
He added that there is nothing left of the previous factors to appear on the real estate scene, except for the central bank’s decision to reduce the monthly deduction rate to a maximum of 40%, after which the real estate market will witness a new positive phase that is hoped to continue for long periods, in a way that enhances growth and economic stability, and establishes market stability away from inflation. .
