On September 10, Crown Prince Mohammed bin Salman openly admitted that Saudi Arabia’s housing prices had risen to “unacceptable levels.” It was a strikingly candid statement from a leader steering one of the world’s most ambitious urban transformations. Saudi Arabia is pouring billions into megaprojects, opening its economy, and preparing to let foreign buyers enter the housing market in 2026. But those same forces driving growth and global attention are also squeezing local families out of affordable housing.

The Kingdom now faces a pivotal question: can it continue its meteoric urban development without creating a housing crisis? The answer lies in balancing ambition with accessibility—cooling speculation, increasing supply, and designing cities that serve everyone, not just a wealthy few.

Short-Term Moves: Stabilize and Send a Clear Signal

Saudi Arabia has already shown it’s willing to intervene, raising the White Land Tax to as high as 10% and introducing a vacant property tax. But for these measures to bite, enforcement must be visible and transparent. Publishing maps of taxed properties and tying revenues directly to housing infrastructure would send a powerful message: land banking will no longer be tolerated.

Rent pressure is another flashpoint. Attempts in cities like Berlin to freeze prices outright ended up reducing supply and discouraging investment. A smarter approach for Saudi Arabia would be index-linked rent caps, tied to inflation and backed by Ejar’s centralized lease system to ensure compliance.

Foreign ownership will require delicate calibration. Canada’s sweeping foreign buyer ban, extended through 2027, has made headlines but hasn’t solved affordability woes because speculation wasn’t the sole culprit. Singapore’s more flexible approach, with adjustable stamp duties that increase when markets overheat, offers a template for Saudi Arabia—welcoming investors but on its own terms.

Key actions in the short term:

• Enforce land and vacancy taxes with public mapping, strict timelines, and reinvestment in housing.
• Introduce rent caps tied to inflation, using Ejar data for transparency and compliance.
• Restrict foreign purchases to designated zones, with surcharges and minimum holding periods.
• Fast-track affordable off-plan housing developments.
• Release pre-serviced plots with conditions to ensure rapid construction.

Medium-Term Strategy: Build More, Build Smarter

Cooling the market is important, but it’s only a stopgap without a rapid expansion of housing supply. Saudi Arabia can borrow from the UK’s build-to-rent model, which has turned rental housing into a serious investment class, creating stable, well-managed communities. Incentives for institutional developers, density bonuses, and REIT-friendly rules could help build a similar ecosystem here.

Inclusionary zoning—long a staple in cities like New York and Barcelona—could ensure that as Riyadh, Jeddah, and Dammam expand, they do so with affordability baked in. Developers can receive density bonuses or subsidies in exchange for dedicating a percentage of units to below-market prices.

The construction industry itself needs modernization. Modular housing, widely used in Scandinavia, has proven it can cut delivery times and costs dramatically. Saudi Arabia’s scale makes it a prime candidate for mass adoption.

Another underused lever is adaptive reuse. Sydney and New York have shown that office-to-residential conversions are a quick way to create new housing stock, especially in districts with surplus commercial space.

Key actions in the medium term:

• Encourage institutional investors to develop large-scale build-to-rent communities.
• Mandate inclusionary zoning in fast-growing corridors, supported by incentives.
• Approve modular and prefabricated housing designs to cut costs and timelines.
• Shift subsidies from blanket buyer aid to shared-equity and supply-focused support.
• Streamline office-to-residential conversions in areas with underused commercial space.

Long-Term Reform: Build a Market That Stays Affordable

If Saudi Arabia wants lasting affordability, it needs structural changes. Land and vacancy taxes should evolve into a comprehensive, value-based property tax system, which discourages speculation and provides a predictable revenue stream for infrastructure. Singapore has successfully used property taxes to keep housing costs in check; Hong Kong, on the other hand, relied heavily on transaction fees, creating volatile cycles. When Hong Kong rolled back these duties, foreign buyers quickly surged back in—a cautionary tale for Saudi regulators.

Transit-oriented development is equally critical. Tokyo’s experience proves that pairing high-density housing with strong transport links can make cities both liveable and affordable. Saudi Arabia’s growing metro and bus rapid transit systems provide an ideal foundation for this strategy.

Finally, the rental market must become more transparent and professional. Expanding Ejar into a fully open data platform and setting up fast-track rental courts would create confidence for both tenants and investors.

Key actions in the long term:

• Transition to a value-based property tax to discourage speculation and fund infrastructure.
• Create a real-time regulatory dashboard to adjust taxes and controls dynamically.
• Link housing growth closely with transit expansion to reduce costs and congestion.
• Make the rental sector fully transparent and efficient, boosting investor confidence.

Housing Policy Is Urban Policy

Solving the housing crunch isn’t just about numbers; it’s a once-in-a-generation chance to reshape Saudi cities. For decades, Saudi urban planning has favored large, single-use districts that separate homes from jobs, schools, and amenities, forcing car dependency and high infrastructure costs. Tackling affordability opens the door to rethink this model entirely.

Denser, mixed-use neighbourhoods with taller buildings in transport-rich areas could unlock more homes while making infrastructure investments far more efficient. Singapore’s success shows that even in land-scarce cities, a combination of density and well-planned amenities can keep housing accessible. Tokyo’s fine-grain zoning and lively, small-block neighbourhoods demonstrate how affordability and livability can coexist. For Saudi Arabia, the housing debate can evolve into an urban renaissance, creating vibrant, walkable, and resilient cities.

A Blueprint for Rapidly Urbanizing Nations

Saudi Arabia has a unique opportunity to learn from others’ mistakes. Singapore’s adjustable levers, New Zealand’s targeted exemptions, Berlin’s failed rent freeze, and Canada’s underwhelming foreign buyer ban provide a global playbook of what works and what doesn’t. With its resources and ambition, the Kingdom could become a pioneer in designing a housing market that’s open to investment but also fair and sustainable.

Housing is not just an economic indicator; it’s the foundation of thriving communities, a productive workforce, and a competitive nation. If Saudi Arabia takes decisive, well-calibrated action, it won’t just avoid a housing crisis—it could set a global standard for rapidly urbanizing nations seeking to grow without leaving their citizens behind.

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