RumahHokie.com (Jakarta) – Bank Indonesia Residential Property Price Survey reported an annual increase from 3.32% (yoy) to 3.50% (yoy) in Q4 2017.
This period, developers again cited more expensive construction materials (34.67%) and higher wages (21.33%) as the main drivers of rising residential property prices.
On a quarterly basis, developers conceded that all property types enjoyed rising prices, especially medium houses, which increased by 0.79% (qtq). In contrast, small houses experienced slower rising prices, decelerating from 0.61% (qtq) the month earlier to 0.43% (qtq).
Developers reported stronger residential property sales in Q4 2017 as respondents predicted that the rising trend of residential property prices would persist into the first quarter of 2018.
Developers expected the gains to affect all property types, especially small houses (1.22%, qtq).
In the first quarter of 2018, survey respondents expected residential property prices to increase by 2.98% (yoy), down from 3.50% (yoy) in Q4 2017, with the slower gains affecting all property types.
Most respondents blamed high lending rates of housing loans (20.11%), large downpayments (18.72%), taxes (15.73%), protracted licensing procedures (13.92%), and rising prices of construction materials (12.39%) as the most binding constraints to property business expansion.
Residential Property Financing
Developers continued to rely on internal funds to finance residential property development, while most customers favored housing loans when purchasing property.
In terms of financing, the majority of developers (56.18%) confirmed depending on internal funds to finance residential property development, consisting of retained earnings (23.04%), paid-up capital (27.22%), other financings (3.89%), and joint venture financing (2.03%).
On the other hand, consumers were inclined to borrow when purchasing property, with the latest survey indicating that most (75.93%) favored housing loans, down from 76.42% in the previous survey.
Meanwhile, the portion of consumers preferring cash installments fell from 17.13% to 16.77%. The latest data pointed to lending rates offered by the banking industry on housing loans ranging from 9.64% – 12.52%.
Congruent with rising residential property sales, the banking industry increased lending to the property sector in Q4 2017. Total outstanding disbursed housing loans stood at Rp408 trillion, with growth accelerating from 2.54% (qtq) to 4.17% (qtq).
In comparison, the national banking industry reported total credit growth at 4.13% (qtq), up from 1.34% (qtq).
According to the latest survey, of the Rp3.10 trillion allocated for 2017, Housing Financing Liquidity Facility (FLPP) disbursements totaled Rp2.7 trillion for the year.