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First-time buyers driven out of capital
After struggling to save for five years, 30-year-old Devy Sylvia Indra finally gave up on her ambition of owning a house in the capital
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fter struggling to save for five years, 30-year-old Devy Sylvia Indra finally gave up on her ambition of owning a house in the capital.
'The price is ridiculous. For the same amount of money, you can buy a piece of land on the outskirts of Jakarta twice as big as that located in Jakarta,' she told The Jakarta Post earlier this week.
Having a house near one's work place seems to be a dream that rarely comes true for the burgeoning number of young middle class people in the capital city.
Like many other such families whose income is insufficient to meet the skyrocketing price of residential units in Jakarta, Devy has opted to live in the city's outskirts.
She has just finalized the mortgage process to buy her family's first house in South Tangerang, Banten, located a few meters from her husband's childhood home.
'We got it at a very reasonable price: Rp 1.1 billion [US$87,129] for a 120-square-meter plot and a fully furnished two-story house. For the same price, you might only get a 70-square-meter site in Bintaro [South Jakarta],' she said.
Devy could not understand how the price of residential property in Jakarta could rise so fast within just a few years. In 2008, she and her husband had to cancel their plan to buy a house in Bintaro as they lacked the Rp 30-million down payment.
The couple decided to buy an apartment unit in South Jakarta instead. 'The price of the house at the time was Rp 400 million. Two years later, the price of the house we intended to buy had soared to over Rp 1 billion, while the price of our apartment unit has barely risen. That was our biggest regret' she said.
Qudsiyah Endah, 35, who works for a private bank in Jakarta, said she had also given up on her dream of buying a house in the capital.
'Whenever I check out a house in Bintaro, I instantly give up after learning the price. I recently checked out a house near Tanah Tingal [Tangerang] and found a piece of property reasonably priced at Rp 600 million, which I've decided to buy,' she said.
She believed her new property came at an affordable price because the cluster housing was built by a small developer. According to her observation, a house in a cluster residential developed by a major developer in Greater Jakarta can be more expensive than an older house in the capital city.
While admitting that she was grateful to finally be able to buy a house, Qudsiyah still lamented the lack of a sustainable mechanism to control land prices.
'I think BI's [Bank Indonesia] policy is already adequate but the housing ministry should also do something to control land prices. Everyone has the right to have a house. But, even for the middle classes the price is getting more unaffordable,' she said.
Spatial planning experts have warned that unaffordable residential units in the capital and uncontrolled housing development in Greater Jakarta could create urban sprawl. It will also exacerbate congestion, as many housing developments in the satellite cities are not connected to the capital's transportation system, which forces commuters to use private vehicles.
Meanwhile, analysts have predicted that the property sector will enjoy growth this year after a slowdown during the election year in 2014.
Head of research at property consultants Jones Lang LaSalle Anton Sitorus predicted that between 10,000 and 30,000 units of landed houses and between 10,000 and 15,000 apartment units in the Greater Jakarta would be launched on the market this year.
'However, the number of available units can only fulfill one-third of the actual demand,' he told the Post, pointing out that private developers could never meet the increasing demand for private housing.
He said the demand for private housing was increasing from year to year in line with buyers' purchasing power. Anton added that he found that 50 percent of new-house buyers bought the houses as an investment, while the remainder were buying their first home.
As the supply is unable to meet the demand land prices are determined by market-based mechanisms, with private developers having the strongest influence in determining the price.
'The government actually has the authority to control the land-price hike, as they have the authority over spatial planning. As long as the government strictly adheres to the rules, they can find a way to curb soaring land prices,' he said.
