Logo of Phnom Penh Post newspaper Phnom Penh Post - Indonesia house price growth projected to slow in third quarter



Indonesia house price growth projected to slow in third quarter

Content image - Phnom Penh Post
The Indonesian housing market is expected to remain anaemic as the central bank sees prices growing more slowly again in the current quarter after a slight uptick in the previous three months. AFP

Indonesia house price growth projected to slow in third quarter

Bank Indonesia (BI) estimates that house prices in the Southeast Asian country 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 August 13, the residential property price index (IHPR) posted annual growth of just 1.49 per cent 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 70sqm.

However, the central bank expects a further slowdown in the current quarter, with house prices seen to increase just 1.12 per cent year-on-year. In Samarinda, East Kalimantan, house prices are estimated to register a 0.23 per cent year-on-year decline.

“That means sales are very difficult. They lowered [prices], cut margins,” said Wendy Haryanto, executive director of the Jakarta Property Institute (JPI), a non-profit organisation 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 per cent year-on-year in the January-March period of 2020.

In the second quarter of this year, house sales contracted again by 10.1 per cent from a year earlier, reversing the 13.95 per cent annual growth seen in the first quarter, which was due partly to a base effect.

“Positive growth in sales of mid-size houses prevented a steeper decline in [overall] house sales,” Erwin Haryono, who heads the communications department at BI, was quoted in a press release as saying on August 13.

Sales of houses measuring 36-70 sqm grew by 3.63 per cent in the April-June period from a year earlier, slower than the double-digit growth seen in the previous quarter. Sales of small houses posted the steepest annual decline at 15.4 per cent.

The majority of surveyed developers in 16 cities told the central bank that rising prices of building materials were the main reason behind the downward trend in sales. Others cited high mortgage interest rates and downpayment requirements.

Mortgage rates averaged 8.44 per cent in June, down from 8.85 per cent a year earlier, according to BI.

The government recently extended value-added tax (VAT) incentives for new houses costing less than five billion rupiah ($350,000) from August to year-end in a bid to revive the housing market.

“For people in the lower-middle [income] group, the VAT [incentive] is not really helpful because it has been difficult for them; from month to month, there is no certainty,” Wendy said.

THE JAKARTA POST/ASIA NEWS NETWORK

MOST VIEWED

  • Construction begins on $1.5B Kampot seaport

    The International Multi-Purpose Logistics and Port Centre, principally invested by Kampot Logistics and Port Co Ltd and projected to cost $1.5 billion, has officially broken ground in Bokor town, Kampot province. The multi-purpose logistics and port centre, located in Prek Tnaot commune, will be built on

  • Cambodia eyes key role in electronics, auto hubs in SEA

    Two roadmaps, part of the LDC’s economic diversification plan, were designed to see it through its migration process, but experts say the journey might be arduous, particularly in the presence of two established hubs in the region By 2028, Cambodia hopes to have exited the

  • Hun Neng, lawmaker and PM’s brother, passes away aged 72

    Hun Neng, chairman of the 4th Commission of the National Assembly, has passed away from heart disease at the age of 72 on the afternoon of May 5, according to the Ministry of Information. Hun Neng is the older brother of Prime Minister Hun Sen, and was

  • Massive stingrays may live in Mekong’s deep pools

    US scientists have suggested that unexplored deep pools in the Mekong River in an area of Stung Treng could potentially be home to significant populations of giant freshwater stingrays, one of the world’s largest freshwater fish species. This comes as a fisherman hooked a 180

  • PM meets with US business giants

    Prime Minister Hun Sen has met with a number of major US companies who have expressed interest in investing in Cambodia, in a meeting convened by the US-ASEAN Business Council (US-ABC). A delegation of companies – including Amazon, Meta, Chevron, ConocoPhillips, ExxonMobil, Ford, Visa and Pernod

  • CCC team off on US business trip

    The Kingdom’s leading economists and private sector representatives have called on the US to renew its tax preferential status for Cambodian exports, as a Cambodia Chamber of Commerce (CCC) delegation departed for a weeklong business visit to the US, where they will meet with