Property prices in Riyadh have stabilised for the first time since Saudi Arabia introduced new mortgage regulations in 2014, according to JLL.

Sales prices for villas and apartments during the first quarter of the year were level with the last three months of 2015, indicating that the market has “bottomed out”, the advisory firm said.

The residential market did however experience a general slowdown in the first quarter, with sale prices for villas and apartments still down by 6% and 4% respectively on a year-on-year basis. Rental rates decreased marginally by around 1% across Riyadh.

“It is interesting to note… the varied performance across Riyadh’s real estate segments over the first quarter of 2016. In the residential market, rental rates witnessed a slowdown, but sales prices have bottomed out as prices stabilise for the first time since the introduction of the mortgage regulations in 2014,” said Jamil Ghaznawi, National Director and Country Head of JLL in Saudi Arabia.

“On the other hand, the office sector continues to see marginal growth in rental rates due to limited supply and KAFD facing new delays.”

Around 6,000 residential units entered the Riyadh market during the first quarter of 2016, bringing the total stock to 995,000, the JLL report said.

“Data from the Ministry of Justice reveals a decrease of around 6% in residential transactions over the quarter, representing the lowest decrease in transactions since the introduction of the mortgage regulations in November 2014,” the report noted.

The regulations involved the increase of the maximum loan-to-value (LTV) ratio for mortgages from 70% to 85% for real estate finance companies.

In the retail sector, JLL cautioned that there could “be some upcoming downward pressure” on vacancy rates due to the opening of several new malls.