The real estate sector in Saudi Arabia is undergoing notable transformations, with the real estate inflation index showing a significant increase, driven by rising monthly rental costs in many areas, especially in major cities. This surge has highlighted the gap between housing supply and demand, putting further pressure on the market.

Concurrently, there is increasing demand for commercial properties for rent in Saudi Arabia, fueled by growing economic activities. This trend is reflected in overall price movements within the real estate sector, particularly as rental prices in Saudi Arabia continue to rise at varying rates depending on location and property type.

Real Estate Inflation Index Increase Rate in Saudi Arabia

The General Authority for Statistics announced an annual inflation rate increase to 2.2% in Saudi Arabia during May 2025, primarily driven by substantial increases in residential rental prices, particularly for villas and rented housing units.

The Authority's monthly report indicated that the housing, water, electricity, and gas sector experienced the highest annual increase at 6.8%. This is attributed to an 8.1% rise in housing rents, with villa rents specifically jumping by 7.1%, marking one of the most significant factors impacting inflation.

Conversely, transportation prices decreased by 0.8%, which moderately helped curb inflation. Meanwhile, food and beverage prices increased by 1.6%, while electricity, water, and home maintenance costs recorded a monthly increase of 0.4%.

This increase is part of a series of rises in the real estate market, amid continued high demand for housing against limited supply, leading to a general increase in the cost of living in Saudi Arabia.

Relevant authorities are closely monitoring these indicators, while consumers are calling for increased oversight of the rental sector and exploring ways to alleviate the burden on citizens through support policies or stricter regulations.