JAKARTA. The potential increase in the demands for property would likely boost the housing price. The prices of house and residential property are predicted to further increase, mainly after the quarter I.
Secretary General of Real Estate Indonesia (REI) Totok Lusida predicts that the price of residential property could increase by 10%-20% in 2017. This would be driven by the capital inflow of tax amnesty program. “The property sector is the most stable investment instrument for the foreign capitals, as the property value would not shrink,” he told KONTAN, Tuesday (14/2).
According to Totok, the tax amnesty program is still running, while the sales of residential property, mainly at the segment of middle-high class, tend to be stagnant in the quarter I. He is optimistic that the property sales would be more massive.
Marketing Director of Perumnas (the National Housing Corporation) Muhammad Nawir said that the price of small house might increase by 10% this year. Aside of the increase in the land and the building materials prices, the increase in provincial minimum wages would contribute to the increase in the price of residential property. This year, Perumnas is planning to build as many as 36,000 units of houses across Indonesia.
Likewise, Director of PT Intiland Development Tbk Archied Noto Pradono predicts that the house price may increase by 10%. This would be affected by the purchasing power recovery, inflation rate, and the increase in the annual costs.
Property business remains sluggish
The property enterprises expect that the property sector would recover, after it has been sluggish during the recent one year.
The sluggish property business reflects on the survey in the property price conducted by BI (the Central Bank) in the quarter IV-2016. During that period, the residential property price growth declined from 2.75% (in the quarter III) to 2.38% in year on year (yoy) basis.
Meanwhile, the price of residential property has slightly increased from 0.36% in the quarter III-2016 to 0.37% in the quarter IV-2016.
The highest price rise at 8.01% took place in Manado, North Sulawesi (yoy). Understandably, this region is massively developing infrastructure. Meanwhile, the lowest price rise at 0.78% took in Denpasar, Bali.
Survey of BI reveals some factors, which have contributed to the increase in house price, such as the increase in building materials by 35.2%, as well as the increase in labor wages by 22.56%.
The house price rise was also driven by the relaxation of loan to value ratio, which was released by BI at the end of August 2016.
Those factors have led BI to make prediction that the property price growth in the quarter I-2017 would remain slow. BI predicts that the house price would increase from 0.32% in the quarter IV-2016 to 0.37% in the quarter I-2017.
The house price is predicted to grow by 1.7% on year on year basis in the quarter I-2017. Since the recent one year until the quarter IV-2016, the house price had been growing by 2.38%. (Muhammad Farid/Translator)
