Economy Saudi mortgage lending rises despite GDP slowdown By Andrew Hammond December 18, 2023, 12:05 PM Reuters/Faisal Al Nasser A security guard at newly constructed housing in Riyadh. Increasing homeownership is a Vision 2030 target Individual and corporate deals rise $199bn lent in third quarter Growth at 0.03% for 2023 Saudi banks’ mortgage lending to individuals and businesses rose in the third quarter, up 13 percent on 2022, despite a slowdown caused by lower oil prices and oil output cuts. A bulletin released this week by the central bank reported loans of SAR591.7 billion ($158 billion) to individuals and SAR155.5 billion to companies in Q3. The total stood at SAR747.3 billion, up from SAR662.9 billion in Q3 2022 and SAR731.3 billion in Q2 this year. The Riyadh government approved its 2024 budget this month with a forecast deficit of SAR79 billion – 1.9 percent of the country’s GDP. Saudi 2024 budget forecasts $21bn deficit, but GDP rise Saudi Arabia seals $11bn syndicated bank loan ‘Oil will still be needed’ – producers react to Cop28 Economic growth this year is at 0.03 percent, as a result of production cuts that were intended to drive up oil prices during a period of faltering global demand and to allow the Public Investment Fund to store up cash for giga-projects. The government expects GDP to rebound to 4.4 percent in 2024. Mortgage lending has risen consistently since 2018, when the government began a drive to raise homeownership to 70 percent as part of the Vision 2030 strategy to diversify the economy away from oil revenues. Activity increased even during the pandemic, when oil prices tumbled. Real estate analysts say homeownership in the kingdom is already above 60 percent. PIF intends to invest SAR4 trillion in the real estate sector over the next 10 years, developing 12 cities as part of the Saudi Downtown project. The government has pushed back deadlines for some of its Vision 2030 projects to 2033 and 2035, in an attempt to avoid inflationary pressures and supply bottlenecks. “Squeezed by weak oil prices, Riyadh is acknowledging that some of its economic plans are over-ambitious,” wrote analyst Simon Henderson of the Washington Institute for Near East Policy. The International Monetary Fund has said Saudi Arabia now needs oil prices of around $86 per barrel to balance its budget. On December 18 prices were hovering below $80. This month Saudi Arabia arranged an $11 billion syndicated loan to help fund its infrastructure developments, the largest government loan worldwide this year.