Residential Property Prices Rise 1.47% at the End of 2021 Amid Improved Sales

Bank Indonesia (BI) survey results show a positive year-on-year (yoy) growth trend in residential property prices in the primary market over the past year.

This is reflected in the Residential Property Price Index (IHPR) in Q4 2021, which grew by 1.47% yoy.

This achievement is higher than the IHPR in Q3 2021, which grew by 1.41% (yoy), and Q4 2020, which grew by 1.43% (yoy).

BI notes that the increase in IHPR stems from price increases in medium and large-sized houses, which grew by 1.48% (yoy) and 0.93% (yoy), respectively. Meanwhile, small-sized houses grew relatively stable at 1.99% (yoy).

Spatially, the highest IHPR growth occurred in Manado City (7.34% yoy), Bandung (2.19% yoy), and Bandar Lampung (1.75% yoy).

Although the annual IHPR shows improvement, house sales in Q4 2021 still contracted by -11.60% (yoy).

This contraction improved compared to Q3 2021 (-15.19% yoy) and was better than the contraction in Q4 2020 (-20.59% yoy).

Sales in Q4 2021 were driven by sales of medium-sized houses, which grew significantly by 11.26% (yoy).

Meanwhile, large and small houses contracted by -2.75% (yoy) and -23.79% (yoy), respectively.

The hampered growth in residential property sales is due to several factors, including rising building material prices, permitting/bureaucratic issues, mortgage interest rates, high down payment proportions in mortgage applications, and taxation.