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Property developers express concern over ‘thinning’ housing loan subsidy
Property developers are lobbying the government and House of Representatives over what they call “thinning” funds allocated to the government’s subsidized housing program, which has become a key growth driver in the sector.
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A housing complex is under development under the government's subsidized housing loan program in Singaparna, Tasikmalaya, West Java, in this undapted picture. The government targets to build 1.25 million houses this year, especially for lower-income families. (Antara/Adeng Bustomi)
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roperty developers have expressed concerns over “thinning” funds allocated to the government’s subsidized housing loan as they bank on public housing programs amid a broad-based slowdown in the property sector.
Four property business associations wrote in a press statement on Jan. 23 that the 2020 budget for loans under the Housing Financing Liquidity Facility (FLPP) only amounts to Rp 11 trillion, which is enough for 97,700 units. That’s much lower than the Rp 29 trillion needed to fund housing needs of at least 260,000 units this year, the group said.
They estimated that the funds would be used up by April because of the exorbitant housing backlog. The business coalition consists of the Indonesian Chamber of Commerce and Industry (Kadin), Real Estate Indonesia (REI), the Public Housing Developers Association (Himperra) and Developers Indonesia (PI).
“The housing backlog is dominated by the social segment [of people] earning less than Rp 7 million, whereas the housing fund allocation for this segment remains limited,” said the acting deputy chairman of Kadin’s property division, Setyo Maharso.
“The sustainability of the property industry stability needs to be maintained—one way to do that is through a higher FLPP quota and alternative substitutes.”
The property sector, which has seen growth of around 3.5 percent in the past few years, relies on subsidized housing programs, which account for half of the industry’s revenue, according to REI members’ data.
The FLPP was initially designed for loans to civil servants, military personnel, police officers and private employees with a monthly income no higher than Rp 4 million, but that figure has since been raised to Rp 8 million.
