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Property price hike impending in late 2022
Experts are optimistic for the property sector but warn developers and consumers of the rise in value added tax (VAT) and Bank Indonesia's (BI) interest rates.
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Top of the world: A housing complex sits on the roof of the Thamrin City shopping center in Jakarta in this undated photograph. (JP/Donny Fernando)
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takeholders are banking on higher sales in the earlier part of the year to help the recovery in the property sector as prices are expected to increase in the later part of 2022 due to a hike in value added tax (VAT) and interest rates.
Arief Rahardjo, director of research and strategic consulting at real estate services firm Cushman & Wakefield, said that economic recovery and government policies remained the key factors influencing the property sector in 2022.
The sector's performance improved last year, compared with 2020, as the government introduced a VAT tax cut on new homes, and rolled out the national vaccination drive.
“We hope that the pandemic [will be] under control and [the government] will provide additional incentives to ease consumers’ burden,” Arief said on Wednesday. “The right time to buy properties is before VAT increases and while the VAT waiver is still in effect.”
Read also: Govt extends VAT cut on new homes but reduces amount
The newly passed Harmonized Tax Law will raise the standard VAT rate from 10 to 11 percent starting in April and 12 percent in 2025 in a bid to boost state revenue and attain fiscal consolidation.
Meanwhile, Bank Indonesia (BI) has said it will raise its benchmark interest rate around year-end to prevent capital outflows as the United States Federal Reserve also plans rate hikes in late 2022. The benchmark rate currently sits at the lowest level ever at 3.5 percent.
