Standard Real Estate Price Indicator Methodology

A standard indicator used to measure changes in real estate prices in the Kingdom of Saudi Arabia during a specific time period. It also measures changes in real estate price indicator prices in the market based on the number of transactions and average price per square meter for each property type.

Methodology

The indicator is calculated using the Laspeyres methodology. Laspeyres

Laspeyres Price Index

(Sum of the product of the current period average price multiplied by the base year number of transactions) ÷ (Sum of the product of the base year average price multiplied by the base year number of transactions) × 100.

Defining Data Scope and Criteria

The scope of real estate transactions included in the indicator calculation is determined based on the following criteria:

- District criterion: Districts that have recorded transactions over a sufficient number of periods are selected to ensure data continuity and indicator reliability.

- Asset type criterion: Property unit types are included in the calculation if the number of transactions reaches a sufficient level over sufficient periods at the city level, ensuring that the included assets have sufficient trading volume to effectively represent the market.

- The included transaction set is classified based on property categories (property types) to include:

Residential: (apartment, villa, duplex, floor, residential land)

Indicator Calculation

For each district and each asset type, the average price per square meter is calculated and the total number of transactions for each category and asset type is recorded for each time period. Then the indicator is calculated for each period using the Laspeyres methodology.

Laspeyres Price Index Methodology – LPI

Based on the number of transactions in the base year.

The indicator is calculated at multiple detailed levels to meet different analysis needs, including:

Asset type: Residential
Measurement frequency: Quarterly
Geographic Scope: Kingdom of Saudi Arabia – includes the 5 major cities.

Unit of Measurement:

Index, base year 2023

Indicator Coverage Start

Q1 2021

Results Verification (Sensitivity Analysis)

The year 2023 was adopted as the base year to ensure indicator stability, after conducting Sensitivity Analysis that included comparing different base years (2021–2024) and excluding outlier values.