Residential Property Prices Increased by 1.94% in Q3 2022

Bank Indonesia (BI) reports that the year-on-year increase in residential property prices in the primary market continued until the third quarter of 2022. The Residential Property Price Index (IHPR) in the third quarter of 2022 was recorded at 1.94% (yoy), higher than 1.66% (yoy) in the previous quarter.

However, in the fourth quarter of 2022, the price of primary residential properties is projected to increase modestly by 1.65% (yoy).

On a quarterly basis, BI notes that the IHPR in the third quarter of 2022 also increased by 0.54% (qtq), higher than 0.35% (qtq) in the second quarter of 2022 (Chart 1). The increase in residential property prices on a quarterly basis was due to price increases across all house types, particularly medium-sized houses, which experienced an increase of 0.79% (qtq), higher than 0.53% (qtq) in the second quarter of 2022.

Furthermore, the increase in the price index for small and large houses was recorded at 0.72% (qtq) and 0.38% (qtq) respectively, higher than 0.31% (qtq) and 0.28% (qtq) in the previous quarter.

Spatially, the increase in the Primary IHPR on a quarterly basis was mainly driven by the increase in house prices in Pekanbaru, Yogyakarta, and Bandar Lampung, with increases of 2.74% (qtq), 1.80% (qtq), and 1.13% (qtq) respectively.

In terms of sales, the growth of residential property sales in the primary market in the third quarter of 2022 remained strong. This is indicated by the 13.58% (yoy) growth in residential property sales in the third quarter of 2022, although lower than 15.23% (yoy) in the previous quarter.

Survey results also show that non-bank financing remains the main source of financing for residential property development. In the third quarter of 2022, 73.20% of the total capital requirements for housing projects came from internal funds.

Meanwhile, from the consumer side, bank financing with the People's Housing Credit (KPR) facility remains the primary choice in purchasing residential properties, with a share of 74.53% of total financing.