Residential Property Prices Slow Down as Sales Decline in Q3 2021

Bank Indonesia recorded a 1.41% year-on-year (yoy) growth in the Residential Property Price Index (IHPR). This growth slowed from the previous quarter's 1.49% (yoy) and was lower than the 1.51% (yoy) recorded in Q3 2020.

The slowdown in IHPR is due to developers intensifying efforts to boost home sales in most cities, resulting in a tendency to hold back price increases.

In line with the slowing IHPR, sales of residential properties have been increasingly sluggish. A 15.19% yoy contraction in contracted home sales was recorded in Q3 2021.

This decline was steeper than the 10.01% yoy contraction in Q2 2021, although property sales growth remained better than the 30.93% yoy contraction in Q3 2020.

According to the central bank, the sluggish property sales are due to several factors. Firstly, 17.01% of respondents cited increased building material prices.

Secondly, 13.44% of respondents were hampered by licensing and bureaucratic issues. Thirdly, 12.22% of respondents were hindered by mortgage interest rates (KPR).

Fourthly, 11.31% of respondents stated that high down payment proportions in mortgage applications were a factor. Finally, 8.43% of respondents indicated that sluggish property sales were influenced by taxation factors.