Faisal Maliki Baskoro
Property research and consulting company Knight Frank Indonesia expects the country’s property market to remain stable through the end of the year on the back of increasing purchasing power, despite a new central bank regulation that will raise the minimum down payment.
Nicholas Holt, the director of research at Knight Frank’s Asia-Pacific division, said on Sunday that prices in Indonesia’s housing market were projected to grow more than in any other Southeast Asian country, with consistently rising prices in all housing segments.
“Stable economic growth, controlled inflation and a huge middle class that needs housing will support property growth,” he said in a statement.
According to a survey by Bank Indonesia, housing prices in major cities grew 3.6 percent in the first quarter this year compared to the same period last year. However, housing price growth slowed to 0.8 percent in the first quarter this year compared to 1.2 percent growth in the fourth quarter of last year.
Hasan Pamudji, the senior manager of research at Knight Frank Indonesia, added that Indonesia’s first-quarter performance put it at 21st place among 53 countries with the highest growth in prices.
“This shows the market in Indonesia will continue to grow,” he said.
Fakky Ismail Hidayat, a senior associate director at the company, said demand for housing would continue to rise consistently despite the new government regulations.
Starting on Friday, financial regulators began to enforce a minimum down payment of 30 percent for customers buying houses with loans. Previously, housing down payments were not specifically regulated but banks typically asked for a 20 percent down payment. The government has also revoked housing financing liquidity facility (FLPP) loans for houses smaller than 36 square meters.
“The down payment rule will cause a slowdown in the housing market’s middle segment, but it [the slowdown] will not be significant,” Fakky said. “With FLPP no longer implemented, this will affect the lower segment of the housing market.”
He added that the middle- and upper-class property segments were still performing well compared to other segments, but that the market was closely monitoring transactions for property worth more than Rp 500 million ($54,000).
Developers have continued to note a strong chance for a price increase in the suburban Jakarta area, he added.
“Developers will also be more aggressive in launching new products, especially luxury clusters with prices above Rp 2 billion,” he said. “The average price growth for suburban Jakarta reached 10 to 30 percent in 2011, and this year we estimate it will increase by 10 to 20 percent.”
Executives in the property and automotive sectors said last week that demand would likely remain strong, even with the new consumer finance rules for housing and vehicle purchases.
Tulus Santosa, corporate secretary of Ciputra Development, said the property developer would wait a few months to evaluate the impact of the policy but remained confident it could reach its goals.
The company is aiming for Rp 6.4 trillion in sales this year, almost triple the Rp 2.2 trillion in homes it sold in 2011.