Housing and Construction Cost Escalation: Causes and Effects in Riyadh

While the United States experienced a sharp decline in residential real estate prices in several regions over the past few years, the Middle East experienced a significant escalation in residential housing costs over the same period. This escalation has led to several social and economic problems, including public dissatisfaction with government policies. The housing cost escalation could be attributed to a number of factors, including the rise of oil prices that typically leads to sharp hikes in inflation rates. The main objective of this research is to identify the factors that led to housing cost escalation, rank them according to their significance, and investigate the best strategies to address them in the short- and long-term. The study focuses on Riyadh city as a case study to apply the proposed methodology, which includes identifying possible factors from the literature, conducting surveys, and interviews; soliciting evaluation as to the effect of these factors; and conducting quantitative statistical analysis to compare the effects of the factors. The most effecting factors are identified to facilitate further investigation of their effects and propose strategies to address these effects. This should prove useful to other cities experiencing similar trends, as it presents a systematic replicable approach to identify the cause and effect of housing cost escalation.