Despite the economic bottleneck occasioned by the pandemic-linked PPKM restrictions this quarter, the property market seems to be moving in the direction of recovery, together with the economy as a whole. The Rumah.com Indonesia Property Market Index (RIPMI) for Q3 2021 shows an increase in the average selling price for all types of homes. New buying incentives on offer from local governments are also motivating buyers to look for their dream home sooner rather than later.
Property developers are optimistic. In terms of supply, after slowing down to let the market absorb existing stock, suppliers are now replenishing the landed houses and apartments available on the market. Meanwhile, buyers no longer have qualms about purchasing property located at greater distances from city centers, with the upside being the promise of a less congested lifestyle. Hence, the property market in the metropolitan areas seems to be seeking a new equilibrium, adjusting to changing consumer preferences as the pandemic begins to subside.
Get The Guru View: Key Findings of the PMI Q4 2021
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Get The Guru View: Key Findings of the PMI Q4 2021
Rumah.com Indonesia Property Market Index Q4 2021: Property Price and Supply Analysis
The Rumah.com Indonesia Property Market Index for the third quarter of 2021 rested at 114.8, an increase of 1.80%, quarter on quarter. Property price growth had slowed somewhat compared to Q2 2021, with 2.24%. Housing prices rose by 1.81% and apartments by 0.84%, quarter on quarter. Meanwhile, year on year, the residential housing market as a whole was up 3.24%, with houses rising by 4.39% and apartments fallling by 2.57%.
The slower growth in housing prices appeared linked to greater supply of housing on the market during 3Q 2021. Resting at 191.1, the Rumah.com supply index rose by 9.58% quarter on quarter. By contrast, in the previous quarter, supply fell by 2.13%. The new units on the market for 3Q may be broken down into houses, where supply rose by 9.44%, and apartments, up by 7.31%, quarter on quarter. The greater supply appeared linked to more activity in the national economy generally, as well as special incentives put in place by the government to benefit the property sector.
Impact of Emergency Covid Restrictions on National Economy
The Government predicted that, as of Q3 2021, annual economic growth would be 4-5% -- slower than for Q2, with 7.07%. The most likely reason for the slowdown is the public health protocols that were implemented on an emergency basis in July (PPKM Darurat). Aside from holding down property prices, the restrictions also held back online search activity at Rumah.com. The search index was down 3.87% for the quarter with the biggest drop-off seen in the under-Rp 1 billion bracket. For Q2, 57% of all search activity fell within this this range. By Q3, however, this figure had dropped to 48%.
Extension of Zero-Percent Down Payment, plus BPHTB Leniency from Regions
On top of a special reduction in the value added tax (PPN) that was extended through December 2021, a zero-percent down payment policy has been extended through December 2022, in line with Bank Indonesia policies favoring a relaxation of the loan-to-value and financing-to-value requirements in respect of property purchases. Meanwhile, the BI 7DRR interest rate remained unchanged at 3.5% as of October 2021.
Regional and local governments, including Jakarta, Tangerang and Bogor have put on offer various concessions as regards the BPHTB land transfer duty (applicable in most cases whenever rights in land change hands).
District Roundup: Banten and West Java solid, West Jakarta
Tangerang City showed prospects
The greatest price gains over the reporting period were in areas clustered around Greater Jakarta in the provinces of Banten (3.07%), West Java (2.30%) and DKI Jakarta (1.81%). With annual price gains of 17.04% accompanied by a 39.93% increase in supply, the city of Tangerang, in Banten, was the leader. Middle class families looking for houses in the Rp 300-750 million range seem to be keen on Tangerang. Unfortunately, search activity there fell by 11.02% for the quarter.
Demand increased in Bogor City
Bogor is an area of perennial interest for homebuyers. While search activity was dropping off elsewhere, in this locale the indicators were up by 20% for the quarter. This may be driven by prices which have been stable here for two quarters in a row, creating a good buying opportunity, especially for investors. Meanwhile, supply in Bogor proper has been rising in tandem with the increased demand.
West Jakarta seen the biggest drop
West Jakarta was the only sector of the Jakarta special administrative region where prices fell during Q3 2021. This is in contrast to the previous quarter when price growth for West Jakarta was better than for any of the other four municipalities. The potential for greater growth in West Jakarta is clear, however. The dip appears to be driven by a 11.81% increase in new supply compared to the previous quarter. Although search activity for this area dropped by 4.53% for the quarter, fully 10% of searches conducted by users of Rumah.com targeted properties in West Jakarta.
RIPMI data for the third quarter of 2021 shows a significant increase in property prices, together with a significant increase in available units in the market. Still, sentiment was affected somewhat by the extenuating circumstances surrounding COVID-19. The Emergency PPKM restrictions in effect temporarily from July to counteract Delta are seen to have potentially hurt the buying power of low-mid range homebuyers. This is seen in the drop-off of online search activity, particularly in the under-Rp1 billion bracket.
Tangerang City and Bogor City, as well as West Jakarta in DKI Jakarta, host some of the most promising real estate opportunities in the near term. Year-on-year price growth was highest in Tangerang. Many property shoppers limited themselves to options in the under-Rp 750 million category. Aesthetically pleasing and cooler than nearby Jakarta, Bogor never loses it’s luster. Yet, upper-range homebuyers are more active than ever here, so others may be getting priced out. West Jakarta is particularly attractive to buyers at this time, due to a price lag that will be, in all likelihood, merely temporary.
For more insights and analysis, read the full report of Rumah.com Indonesia Property Market Index Q3 2021:
Or, read past Rumah.com Indonesia Property Market Reports: