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House price growth projected to slow in third quarter
Indonesian housing market is expected to remain anemic as the central bank sees prices growing more slowly again in the current quarter after a slight uptick in the previous three months.
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Blue sky is seen above the usually polluted capital city of Jakarta on July 2, 2021. The national housing market is expected to remain anemic as the central bank sees prices growing more slowly again in the current quarter after a slight uptick in the previous three months. (AFP/BAY ISMOYO)
B
ank Indonesia (BI) estimates that house prices will grow more slowly in the July-September period after a slight uptick seen in the previous quarter, pointing to continued weakness in the market despite tax incentives.
As BI reported on Friday, the residential property price index (IHPR) posted annual growth of just 1.49 percent in the April-June period, higher than in the preceding quarter but lower than a year earlier. Growth increased across all house types except for those larger than 70 square meters (sqm).
However, the central bank expects a further slowdown in the current quarter, with house prices seen to increase just 1.12 percent year-on-year (yoy). In Samarinda, East Kalimantan, house prices are estimated to register a 0.23 percent yoy decline.
“That means sales are very difficult. They lowered [prices], cut margins,” said Wendy Haryanto, executive director of the Jakarta Property Institute (JPI), a nonprofit organization that facilitates dialogue between the government and real estate firms.
House prices have plateaued with growth generally slowing since at least 2018, BI data shows. The pandemic added further pressure and led to a decline in sales by 43.19 percent yoy in the January-March period of 2020.
Read also: Indonesian homeownership slides as affordability issues arise
In the second quarter of this year, house sales contracted again by 10.1 percent from a year earlier, reversing the 13.95 percent annual growth seen in the first quarter, which was due partly to a base effect.
